Condo Conversions Are The New Residential Reality

For the second quarter 2004, "condominiums accounted for 12.8 percent of the housing market--a 33.3 percent increase over the past ten years--and have appreciated in value at an unprecedented double-digit pace for the past four years. This demand is being driven by first-time buyers, many of whom have been priced out of the current housing market boom, as well as increasingly wealthy empty nesters that are recouping huge appreciation windfalls and reinvesting in lower-maintenance condos or co-ops, often in downtown areas...

Despite the local government reticence to see rentals--typically a source of affordable housing--taken off the market, municipalities are also benefiting from the current condo mania. Many condo conversions are older rental buildings that have a significantly lower appraisal value and pay lower property taxes as a result. Consequently, revamped properties that are repackaged and sold to a condominium buyer will often result in a higher property taxes, providing local governments with an additional source of revenue."