The West Valley sections of the Arizona Republic ran this story on the expected surge in apartment-to-condominium conversions on the same day they ran my column predicting just that outcome.
They said:
Condominium conversions are happening all over the Valley, with new projects in Glendale, Phoenix, Chandler and Scottsdale.
Real-estate brokerage firm CB Richard Ellis predicts about 6,000 apartments in the Phoenix metro area will be converted to condos by the end of the year.
What makes them appealing to potential homeowners is that they are relatively cheaper than single-family homes and a better investment than renting an apartment, experts say.
October figures for home sales in the Glendale and West Valley areas list the median condo sales price at $159,900, compared with $299,900 for a single-family home, according to the Arizona Regional Multiple Listing Service.
“It will offer an affordable alternative to someone who can’t qualify for a new home,” said Greg Burger of RL Brown Housing Reports. “It’s a much better alternative than renting.”
I said:
If there are suddenly a great number of qualified home buyers with no homes to buy, it’s not difficult to figure out what will happen over the coming months. Here’s the prognosis:
We will see more apartment-to-condominium conversions, especially at the low end of the price scale. There are qualified buyers with zero available inventory at the same time that older apartment communities suffer huge vacancies. This is an entrepreneurial opportunity.
My columns are written well in advance, so the two articles running on the same day is purely serendipity. But I think the conclusion I draw stands as a stout rejoinder to all the Chicken Little rhetoric we hear from allegedly-informed sources:
Finally, expect the unforeseen. Where there is increased unmet demand, there will be increasingly creative solutions to meeting that demand.
This is the dynamism of the free market, and this is why the sky so rarely falls, despite persistent predictions to the contrary.
For every ten people wailing, “What will we dooooo?!?”, there is one entrepreneur wondering, “How can I make this work to my advantage?” Chicken Little grabs the headlines, but it is the entrepreneurs who have given us all the wealth we have, and all the wealth we will have.
