Putting Renters in a Tight Spot

Condominium Conversions Force Many to Find New Housing

Elsie Cunningham's landlord presented her with a difficult choice: buy her Arlington apartment or pack up and move.

Cunningham, 62, had been renting the two-bedroom unit for $1,300 a month. Earlier this year, the landlord at the Brittany complex said she could buy it for $421,000, which would require a mortgage far beyond her means.

"We had a lot of elderly and disabled friends . . . who had planned on dying at the Brittany," said Cunningham, a retired federal worker who lived there for 18 years. "The shock of having to move very quickly because they could not afford to purchase their homes or did not want to purchase was devastating."

Landlords seeking to exploit skyrocketing real estate prices are converting apartments into condominiums at a blistering pace, a trend that is providing new buying opportunities for some of the region's middle-class residents but is also pushing thousands of less-affluent residents out of their homes.

Five thousand area apartments become condos in 2003, and a whopping 14,500 in 2004, according to Delta Associates, a real estate consulting firm. The number of conversions this year is expected to far surpass last year's total, housing officials say.

When apartments are converted into condos, renters are offered the first chance to purchase a unit, usually at a discount. But only a small portion -- usually about 10 percent -- do so, housing analysts say.

The rest have to scramble to find other places to live. And they do not have much legal recourse, especially in Virginia, where the laws generally favor the rights of property owners over tenants.

Housing officials, alarmed over the dwindling supply of reasonably priced rentals, say the trend will exacerbate the region's affordable housing crisis.

Melodie Baron, a division chief in the office of housing in Alexandria, said: "The city is very concerned about it. This is an awful lot of affordable rental housing to be losing." Nearly 2,400 apartments, or 10 percent of the city's rentals, became condos in less than two years.

Many jurisdictions are proposing programs to help displaced renters, often at taxpayer expense. Some provide no-interest loans and mortgages to help first-time home buyers. Montgomery County imposed a 4 percent tax on condo conversions to help cover an affordable housing fund. Last month, Alexandria approved providing $30,000 no-interest loans to help renters of converted apartments buy their units. The income limit for a family of three to qualify for the loan is $89,300.

Fairfax County, meanwhile, has earmarked a penny of the real estate tax rate for an affordable housing fund that will provide incentives meant to keep some affordable rentals from becoming condos.

Housing officials expressed another worry. At a time when housing analysts are fretting about a possible real estate bubble, the sudden flood of converted condos may put downward pressure on prices, some warned.