Condo conversions: a path to affordable housing
by Richard Westlund

As single-family home prices rise throughout Florida, condominium conversions offer an affordable path to ownership for many first-time buyers. In many cases, condo converters offer attractive financial incentives to encourage purchases by renters seeking to achieve the American dream.

“Condo conversions continue to be in demand and they open up a market by providing an affordable avenue of homeownership for those who may otherwise be priced out of the market,” says Catherine Z. Williams, an associate with Coldwell Banker’s Palm Harbor office. “Condo’s are an alternative to renting and provide homeowners with less maintenance at a reduced cost of living making this an attractive option for a large segment of the market ”

To take just one example, Puig Development Group purchased a 256-unit rental complex in Orlando, converted it to Summerlin at Winter Park and offered condominium units starting in the low $100,000s.

The median home price in Orlando soared 44 percent in the past year, and this development provided an attractive option for first-time buyers.

Because rental apartment buildings can usually be upgraded for a fraction of the cost of new construction, many condominium conversions are attractively priced for budget-conscious buyers. Another advantage is that condo-conversion projects can often be completed in just a few months, while new high-rise residential construction typically takes two years or longer. That faster pace means quicker occupancies for buyers and faster paydays for real estate professionals.

“Condominium conversions are the most logical product for affordable and starter housing in many market areas,” says Lewis M. Goodkin, president of Goodkin Consulting in Miami.

Orlando Camps, president of the Condo Conversion Division with the Cornerstone Group in Coral Gables, believes that condo conversions are the most effective way to provide workforce-oriented housing—especially in areas where raw land for new development is unattainable.

“In a typical 200- to 500-unit condominium conversion, the developer can refurbish the buildings, make any necessary structural improvements, renovate pool decks, fitness centers and clubhouses, and still offer remodeled units at price levels well below new construction,” says Camps.

Cornerstone Group is marketing nearly 1,000 conversion units in communities throughout Southeast, Southwest and Central Florida at prices starting from the $150,000s to $250,000s. “Our intention is to continue offering a highly affordable product with nice amenities for first-time buyers,” adds Camps.

However, the demand for rental housing was so intense during 2005 that in some cases prices have been driven past the point at which some complexes can be turned into marketable conversions, adds Goodkin. “Many of these projects will be returned to rental stock because of this,” he adds. “Other projects will find that they will need to reduce prices to experience satisfactory sales rates. But for projects that are priced right, the opportunity for good sales rates will continue [in 2006].”

While noting that conversions fall into many different price categories, Andrea Leslie, sales director, development division for The Keyes Co. in Miami, calls them a “smart alternative” for first-time buyers. “We’re representing a project in Boca Raton called Belair Boca that allows buyers to purchase a one-bedroom condo in a gated, amenity-rich community in the $177,000 price range,” she says. “This is an offering that rings true to many first-time buyers.”

Richard Westlund is a Miami-based freelance writer.