Miami Real Estate: The Down Market Turns Condos Into Affordable Housing Units

The real estate boom periods have long gone, and have left behind a whopping inventory of unsold existing single-family homes and condos, along with loads of home builders who are more than willing to make attractive bargains and offers to get their existing stock sold.

In areas like Miami, there are condo conversion developers who are stuck holding the bag, having transformed apartments into condos as demand waned over the last year. The quagmire further inflamed by the depressing subprime lending market has made it clear that Florida’s high appreciation rates, and subsequent housing costs, may not hold out much longer.

Condo Conversion Developers Could Drastically Lower Their Prices

Because of the events that recently reshaped the housing market, a lot of developers who dived into the condo conversion business now feel the need to bail themselves out quickly. Local housing analysts say that many have considerably lowered the price of their properties, in order for them to quickly pay off their own loans, and this scene continues to play out in many markets across Florida, especially in areas like Miami where thousands of condos have been built or converted over the last few years, with a considerable number still l under construction.

Just a few years ago, a lot of investors quickly rushed in to pay deposits down on these new developments, as quickly as they were announced; however such demand diminished as the housing market leveled off, and left those potential property “flippers” holding their bags.

The Prospects For More Affordable Condos Are Taking Hold

Market analysts say that the pricing has dramatically curtailed,and now see the prospect of new “affordable condo” trend taking hold nationwide, driven in part by a continued demand for workforce housing that school teachers, firefighters and police officers can afford. Many buyers in South Florida are finding what they’re looking for in condo conversions that no longer fetch the high appreciation rates that were promised to initial investors. Many see that in some cases, these types of units are being marketed today at affordable prices, and even some developers ‘give the property back’ to the lender because the economics didn’t work out.

Condos that are priced $200,000 or lower, and those priced over $1.5 million, seem to be bucking the trend, as some analysts point out that the middle market has been hit much harder by the current conditions. Many see a silver lining to all of this, since it’s the fact that developers who will survive the current housing downturn and who know the business, should be able to quickly tap the opportunities to becoming second or third owners of properties.

Housing market observes note that workforce housing for those who earn 120% of the median income number is also showing signs of loosening up, because greater attention is now being paid by the media and government to this sector. Many these days view that a condominium is typically less expensive than a single-family house, which makes condos a better potential to provide a greater stock for workforce or affordable housing units.

From a developer’s standpoint, a real crisis exists in both the affordable housing and workforce housing markets not only in Florida, but also in other markets as well, and this presents a wonderful opportunity for developers who are ready to roll up their sleeves, tap into local tax credits and build homes that meet the budgetary requirements of those who need affordable housing.

Vanessa Arellano Doctor


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