In Conversion News…
As mentioned previously, the city had been considering an ordinance to ensure conversion developers notify lower-income tenants about displacement assistance or they would be fined. Last week the council unanimously passed the ordinance. Developers or landlords who fail to provide notice will be fined $100-a-day for every day they violate the ordinance. It’s a start.
On the heels of the Max conversion casualty, The Daily Journal of Commerce reported today that conversions are slowing down.
…fewer apartments are being bought for conversions in the region.
Dupre + Scott Apartment Advisors forecasts about half as many units will be purchased this year as last. The credit crunch and ensuing slowdown in home buying nationally is making lenders “less anxious†to lend to converters, said Mike Scott, a principal with the firm.
Additionally, it’s becoming more cost prohibitive due to the rising prices of apartment buildings, turning away potential developers from getting in on the conversion phenomena.
[A developer] is backing off now on buying apartment complexes here because prices “are in the stratosphere,…
Dupre + Scott’s research shows regionally the average price of units appropriate for conversion has jumped from $99,928 in 2000 to $145,591.
This has some positives. For tenants, fewer buildings will be purchased for conversion which will provide some comfort from having to deal with displacement. For the condo market, it’ll help to constrict excess inventory. On the other hand, it may provide fewer opportunities for first-time condo buyers as many of the new developments are focusing on the high-end market, at least in the city core.
