The Condo Conversion Craze

Gainsville.com reports:

Nationwide sales to converters increased to more than $28 billion (representing 182,742 units) in 2005, according to New York-based research firm Real Capital Analytics Inc.

It is a lucrative business during these times of skyrocketing home prices. Economists warn, however, that in areas such as condo-rich Miami, there may soon be a glut of unsold units.

The sales of individual condominium units generate cash-on-cash returns of between 15 and 30 percent or more in a matter of months for converters. Meanwhile, conversions actually create more affordable housing.

The median sales price of existing homes in the Gainesville Metropolitan Statistical Area was $179,000 in the year-end report by the Florida Association of Realtors. The Gainesville Alachua County Association of Realtors, which distributes monthly reports, shows condo and townhome prices averaging $131,000 to $162,000.

Does this dramatic increase in condominium units here mean there is a potential glut? Perhaps not now. According to George "Bo" Clevenger with ERA Trend Realty, while there are still many purchasers, some developers are offering enticing incentives to get even more - including college tuition, 42-inch plasma TVs and thousands of dollars toward closing costs for employees of Shands or the colleges in town. This could indicate people are not rushing in.

College tuition! You've heard it all.So you can be in debt on your condo and take on some student loan debt.We couldn't make this up.If things are so good for the real estate people why are they giving away free stuff? We have a feeling that these condo conversions are going to wind up as rentals.