The Home Blog

Orlando area Apartment Market in a crunch

What's the opposite of a housing bubble? How about the apartment vanishing act. The rise in demand for home or condo ownership brought on by a long period of low mortgage rates has resulted a drop-off in new apartment construction and a conversion of the apartment inventory to condos. Now some of those conversions return to the market as leases, but the net result is a high occupancy rate and the corresponding rise in rental rates.

Last year, Metro Orlando was No. 2 in the nation in the number of apartment units sold for conversion to condominiums. Nearly 17,000 units changed hands. The year before, Orlando was also highly ranked when more than 4,400 units were converted.

That two-year wave of conversions reduced the area's rental supply by about 13 percent, according to Bob Miller, an apartment specialist with CB Richard Ellis in Orlando. (Link)

Currently Orlando's Apartment is an amazing 97.2% occupancy. Combine that with our low unemployment rate and you have a situation where people want to move down here for the jobs, but then find there is no place to live. Local officials and business owners need to resolve this situation before word gets out that Orlando is not the place to go for a new job as the cost of living is too high or it's just too inconvenient to find a place to live nearby where you want to work. The job applicant market, already weak, will dry up and our local economy with it.

A side effect of this I personally experience last year is that rental house rates are also going up. We were told by our home owners that they would not be renewing the lease because they wanted to remodel and sell the property. Instead they just kicked us out and rented it to another couple for a much higher monthly rent. (In truth, this was probably to get out of the deal they had with their existing property management company, but the reasoning was the same.)

With all the investment homes on the market, it's probably a good time to be a property management company. I'd be making cold calls to owners of homes that have been on the market for 90 days or more with an offer to fill up all these vacant investment properties with renters on 7 month leases. Throw in some Salvation Army/Hotel used furniture and call it a furnished home, you could make some real bucks.

Should you buy an Apartment to Condo conversion?

There's a current thread over on ask-metafilter that discusses some of the issues you might face when buying a condo that was converted from an apartment, aka Rondo. Some of the issues are:

• Are there different standards for building apartments vs condos in your area? thinner walls, less greespace, etc.
• Will there be politics in the condo association board, if so does that bother you?
• Ask your potential neighbors about soundproofing, maintenance and a/c-heating costs.

Around Orlando the pace of conversion continues, but elsewhere where the housing market has slowed down some conversions have stopped or stalled. This has resulted in mixed-use buildings with some being condo owners and some being renters from a managment company. That can lead to a host of problems with neighbors who don't have a pride of ownership in the property that results in your value being dropped.

The Economist Weigh In.

The Economist has weighed in on the global housing boom. Apparently the Bubble has burst all over except for the U.S.. How can this go on?

Rondos, Condos, and Bears, oh my!

The Tampa Bay Florida centered Real Estate Journal has a very informative look at the Rondo, the term for Apartment complexes that have been turned into Condos for a quick profit by developers. I'm of two minds on the Rondo, yes they do offer great entry level pricing for young families. But owning a condo is different from owning a home and what happens when the apartment market is starved of units (rent goes up, of course!)? Where will people who don't or can't own stay?

For a business blog there is some important reading at the Tampa Bay Real Estate Journal and plenty of good insight mixed in with the obligitory product links.

[ ttags: rondo, condo, apartment, tampa, real estate, living ]