Condominium conversions not so troubling after all?
Fort Lauderdale, Fla. — The hysteria that surrounds the conversion of rental units to condominiums seems to be grossly exaggerated, according to a survey by the 58,000-member Florida Association of Realtors.
The study was conducted during the first three months of 1980, embracing a period from January 1979 through January of this year. It was under the supervision of Barry J. Hersker of Hersker & Associates, Miami. Dr. Hersker also is on the faculty of Florida Atlantic University, Boca Raton.
The survey was carried out in Miami, Fort Lauderdale, Palm Beach, and St. Petersburg- Tampa, areas where the bulk of the Florida condo conversions have taken place.
Dr. Hersker said, "The impact on persons most directly involved when rental units are converted into condominiums -- and I refer to the tenants -- apparently is far less than popularly believed.
"Not only is the hostility of tenants experiencing conversions less than previously believed, but the study also clearly indicates that the net displacement effect of the conversions on the supply of alternative rental housing may not be as great as the number of converted apartments might seem to suggest.
The study was designed to obtain information on the impact of condominium conversion in Florida on those who are most directly affected by such conversions, the purchasers of conversions and those who move to other residences because they cannot or choose not to buy.
The study showed that the majority of tenant-purchasers (58 percent of the sampling) did have negative feelings when they learned of conversions. It concluded, however, that the hostility of the tenants was less than is popularly believed or else that their hostility and negative feelings tend to decline rapidly after a purchase or a relocation.
Dr. Hersker pointed out a lack of accurate information regarding the prevailing vacancy rate and expressed the feeling that the widely reported vacancy rate of 1.2 percent is not accurate. The researchers, too, were distressed to find that accurate information is lacking and that "guesstimates" are used even in forming legislative action that has far-reaching social and economic implications.
"It should be remembered," the report stated, "that condominium conversion is a shift in residential status rather than a diminution of available housing."
The Florida Division of Land Sales and Condominiums in Tallahassee noted that last year 16,145 apartment units (2.8 percent of the total number of rental apartments in the state during 1979) were converted into condominiums. This does not mean, it was explained, that 16,145 households were suddenly thrust upon the market to compete for a limited but unknown number of vacant apartments.
Based on the number of conversions, and utilizing the percentages that were determined by the study, it was shown that the actual rental "shortfall," or impact, was only 2,712 apartment units from the total number of conversions.
Of the 16,145 conversions in 1979, the study indicated that 40 percent, or 6, 458 units, were retained by tenant-purchasers. Of the outside purchasers, 29 percent, or 4,747 households, moved from other rental apartments, thus freeing them for new tenants.
Also, of the 60 percent of tenants who moved from the 16,145 conversions, only 77 percent, or 7,459, rented apartments. The Difference between the 7,459 and the 4,747 results in a shortfall of 2,712 rental apartment units -- less than one-half of 1 percent of the state's total rental-apartment pool in 1979.
According to the results of the study, of those persons who moved from apartments being converted, 12 percent actually bought condominiums in other buildings, 8 percent bought homes, and 2 percent rented houses. In addition, about 6 percent said they actually regretted not having bought their units.
"To say that the issue of condominium conversions is of major concern to many Floridians is a gross understatement," the study reported.
"It is of great concern, and this fact is readily discernible from this research, from reports in the media, and from the protests of the many tenants who are directly and unexpectedly confronted with conversions of their apartments to condominiums.
An important finding was that a strong preference existed for relocation near the original apartment.
"The majority of those who moved seemed to have been able to find such accommodation," the report said. In other words, 61 percent found a location in the same neighborhood, with 18 percent reporting locations nearby or less than two miles away.
Only 7 percent relocated more than 10 miles away from their original apartment.
The average time it took to find alternate housing ranged from 1.9 months in Broward County (Fort Lauderdale, Pompano Beach, and Hollywood) to 3.1 months in Palm Beach County. The four-county average relocation time was 2.3 months.
Rents also increased in all four counties for those tenants who moved because of the conversion.
"For the four-county area, average monthly rent paid by tenants who moved due to conversion went from $303 per month to $334 a month," the report stated.
The research findings did show that the trauma for conversion is a shared experience felt in equal proportions by all tenants affected, buyers and movers alike.
"It is probable that the media coverage has in no small measure contributed to the fears of many apartment residents, although not deliberately so," the report concluded.