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Do condo conversions reduce options for low-income renters?

SHARE Do condo conversions reduce options for low-income renters?

Developers turning longtime apartment buildings into condominiums argue they are providing an alternative to both escalating rents and home prices.

Housing advocates, however, are alarmed that a condominium boom is making affordable rental housing increasingly rare in the Salt Lake Valley."Conventional wisdom holds that home ownership is always better. I'm not sure if that's true, not if it is at the expense of low-income renters," Salt Lake City Councilwoman Deeda Seed said.

At the current rate, 10 apartment buildings in the city will become condominiums this year.

Salt Lake's condominium surge started, and peaked, in 1979 when 1,380 apartments were converted. Since then, hundreds of apartments have been turned into condominiums.

Of 75,000 total housing units in the city, 6,000 are now condominiums; more than half of those once were apartments. Converted condominiums sell for as low as $55,000.

Prudential Prestige Realtor Kevin Jensen sees condominiums as a critical step in the housing cycle: Renters buy condominiums and vacate their apartments for other tenants. Then, after building equity, the condominium owners move into a home, leaving the condominium for a new buyer.

With low interest rates and home prices leveling off just out of reach of first-time buyers, condominiums fill the gap between $600-a-month apartments and $1,000 mortgage payments, Jensen said.

In some cases, buying a condominium is easier and cheaper than buying a house or renting. Some lenders require only 3 percent of the condominium price as a down payment. And some sellers are willing to pay their buyers' closing costs.

"This kind of housing fits the need for a lot of people who didn't even think they could afford to get into a house," Jensen said.

While converted condominiums provide an affordable option to renters, conversion also means tenants who cannot afford to buy their units are forced to look for other abodes.

"They're taking older, presumably affordable housing and turning it into high-end condominiums," said Whitney Rearick, Utah Issues housing specialist. "These developers are not replacing what is lost."

Amy Rowland, Bank of America's community development vice president, added: "I have doubts about whether this is really the best thing for this market. Rental housing is what seems to be in most short supply."

Some owners simply turn around and start renting the unit again, turning some condominium complexes into quasi-apartment buildings, with dozens of different landlords. And once an apartment becomes a condominium, Salt Lake City has no control over inspections or management.

"You can get the worst of both worlds," said Councilman Roger Thompson. "You have a condominium complex full of rentals and nobody there to manage the building."

Thompson ventured in real estate in 1973 when he and his partners turned the Bonneville Tower and the Belvedere buildings into condominiums. He wants city staff to add a clause to the law covering conversions that would allow condominium associations to limit the number of units that can be rented and expand their rights to evict problem tenants.