Much of the attention heaped on South Florida's struggling condominium market has been focused on the sexy, luxury towers that shot up along the coastal waterways. Before the curious eyes of the world, a historic construction boom restyled the skyline in just a few short years. But beyond the waterfront properties and the focus of the national media, in South Florida's less come-hither heartland -- communities such as Kendall, Hialeah and Lauderhill -- an even larger wave of condo creation was taking place and bringing rapid change to the housing landscape.
Hundreds of rental buildings, representing tens of thousands of units, were being bought by developers, emptied of renters and turned into condominiums for quick resale, mostly to investors and speculators, as so-called condo conversions. And now that slice of the market is in real trouble.
Since 2003, when housing prices took off, more than 74,000 rental apartments were converted into condominiums in Miami-Dade and Broward counties, twice as many as the previous 50 years combined, according to state records of condo conversion applications. The number compares to roughly 53,000 new units constructed in both counties since 2003, according to research of state records by Condo Vultures, a Bal Harbour-based brokerage and real estate consultancy. As the fallout from the housing collapse continues, the conversion market — largely a collection of aging garden-style complexes and dowdy mid-rise buildings — is shaping up as one of the biggest losers of the downturn.
Most real estate analysts predict it will be the last submarket to recover since it is competing for scarce buyers with the swanky supply of new condos being marketed at cut-rate prices.
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``It's ugly out there. The conversion market is extremely dysfunctional,'' said Constantine Scurtis, the Miami-based vice president of The Lynd Co., a large, national apartment management company headquartered in San Antonio. ``There were a lot of inexperienced developers that converted product that never should have been converted.''
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