Before the housing bubble burst in the late 2000s developers in the United States had found a new method of gaining high returns in a relatively saturated market – condo conversions. A condo conversion is simply the conversion of an apartment, or apartment community, that is a rental unit, into condominiums. These projects can be capital intensive, and thus were hurt in the liquidity crunch that occurred as a result of the global financial crunch as banks were much less willing to lend. Today, demand continues to rebound for residential ownership, especially in large cities where owning a condo can be much more convenient than owning a single-family home.
The East Coast in particular has seen condo conversions really begin to take off. These conversions give developers an exit strategy if they feel the market is strong. After developing a property to be apartments, they can opt to convert the units into permanent condominiums if they feel the demand is there. However, the companies often require a rate of return on their investment of 20 percent, without reaching this bar it is unlikely the property will be converted.
The Miami condo market is strong, and condo conversions are likely to bring more high quality properties to market in the coming years. For those who wish to live in a multidimensional and international city like Miami, condos are a great option because they offer many of the comforts of a conventional house while being located in urban areas. If you’re interested in the Miami condo market or Miami real estate in general, feel free to call or email a RE/MAX agent today!