Condo conversions were once one directional. In this post recessionary market, it's a two-way street. "Reversions" of troubled condominium projects seemed to be a no-brainer after the economic downturn two years ago, but only a few firms have figured out how to turn the disaster of the fallen condo craze into higher profits. Before 2006, conversion was a positive word; developers turning out apartments realized that in some markets, condominiums had become the new gold rush.
Across the country, condos were the rising stars of multifamily living. Las Vegas boomed with new buildings. Sun-seekers sought high-rise homes in Miami. There were concerns that investors, rather than homeowners, were buying too much into the craze.
Opportunists with some market experience waited for the banks to release the loans and properties at low values, then swooped in to snatch them up and either hold or sell when the market quickly returned. Well, we know how that turned out. The banks, faced with thousands of bad debts, realized the extend-and-pretend scenario (see page 10) could be a better option, to the relief of owners.
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