After the craze: Fort Myers Condo conversions leave fractured communities


Michael Jacob was living at the Monterra apartments in Bonita Springs in 2006 when the wave of condo conversions came through.
Jacob, and everyone else in the 244-unit complex, was told by management to leave if they didn't want to pay the sky-high price to buy - it was the very top of the wave to turn rental apartments into more lucrative condo sales.
Luckily for Jacobs, he and his wife didn't buy their one-bedroom apartment for owner Tarragon Corp.'s asking price of about $200,000. Prices crashed almost immediately and Tarragon hastily canceled its plans even before the last tenants left.
"Poetic justice," said Jacobs, who works as an assistant Lee County attorney. "It was just such an outrageous price."
The original conversion craze got going in earnest in 2004 as developers, faced with a huge demand by speculators for property, got in early and made a lot of money but those who were still playing the game in 2006 found themselves unable to sell at a profit.
Monterra tops the list of wildly excessive pricing. Tarragon paid $54 million in October 2005 for the complex, an all-time county record of $222,090 per unit.
Now, four years later, it's a different landscape - many of the apartment buildings that were converted have reverted or, more commonly, exist as "fractured" communities with owners and renters living in uneasy proximity.
Prices have fallen sharply. The median price paid for an existing condo in 2009 was $125,400 - less than half the $298,800 prevailing in 2006. Investors have reacted by walking away from condos they bought hoping to flip for a quick profit, contributing to the huge rise in foreclosures over the past four years.
What now?

Not much in the short term, because investors and condo dwellers alike are typically underwater on their units and unable to sell, said Paul Kaplan, managing partner of Miami-based KW Property Management & Consulting, which provides services for condo and homeowner's associations.
Over time, he said, it's likely that a trend of "absorption" will take place: as prices eventually rise, the rental units in a split community will be sold and the conversion complete.
Courtesy Fort Myers News Press
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