Condominium conversion is spreading across the United States like a prairie fire. Those housing activists fighting the flames -- though their numbers are growing -- are probably cousins to King Canute, trying to stop the inevitable.
Condominiums answer many of the housing problems of that irresistible force, the baby-boom generation. The units suit smaller households, require less upkeep which is important to working couples and save older people from tending yards and cleaning gutters. The buildings use up less of diminishing land space, and are attracting people back to many cities.
And, mainly, condominiums offer all the investment opportunities of homeownership -- tax breaks, capital gains -- at less than you'd pay for a single-family home.
Converted condominiums are the cheapest, and often the most charming homes of all.
In a condo conversion, the owner of an apartment house spruces it up, writes by-laws and sells the units to individual owners. The building may be a large one downtown or an old brownstone on a sidestreet.
Instead of renting, you own the space. Within your walls, you can change things as you like (consistent with the condo rules) and, just like any other homeowner, sell the unit when you want to move. Condos are normally financed with mortgage loans. You deduct your share of the property's real estate tax and pay something into a common pot each month, to help maintain the building.
If you're already a tenant in an apartment building that converts, you can typically buy your apartment for something less than the market price, then sell to someone else at the full, appreciated value. (If you were an oil company, they'd say you had a windfall profit.)
Conversions -- which are more easily and cheaply done than putting up a condominium from scratch -- have taken cities by storm. Advance Mortgage Corp. predicted that, in 1979, conversions would rise by 40 percent. The actual figure: 70 percent. Started as a big-city phenomenon, the craze is now devouring smaller cities and suburbs too.
As soon as tenants caught their collective breath, many of them began to organize against condo conversions. The battle lies between middle-income tenants, who see condos as their best shot at home ownership, and lower-income tenants who will be pushed out -- often to inferior housing. The elderly, in particular, are afraid of being uprooted.
In those neighborhoods and cities where conversions are in full swing, the amount of good rental housing declines and rents in the remaining buildings may shoot up.
Last year, organized objections slowed or temporarily halted conversions in many cities, among them Washington, San Francisco, Seattle and Evanston, Ill. Nearly half the states now have tenant-protection laws on the books, and most of the others have something under consideration. A national law has been proposed to Congress.
In general, tenant protection is shaping up this way: Three-to-six months' notice before tenants who don't buy their apartments have to leave; a tenant's right to buy his own apartment at a bargain price, before that unit is offered to anyone else; and full disclosure of the building's structural condition before sale.
Other protections, available only in a few areas, include: relocation assistance to long-term tenants; extended leases for older people; allowing older people or the handicapped to remain as tenants for life; a requirement that the building's owner get the consent of a certain percentage of tenants, before conversion can begin.
Montgomery County taxes condominium converters and uses the money to help tenants move or buy their apartments. Housing activists in New Jersey are lobbying for the toughest law, which, among other things, would guarantee tenants who don't buy, the right to remain in their apartments for life.
But rather than slow conversions or maintain renters, the tide today is running with those who want to buy. The Department of Housing and Urban Development is even experimenting with mortgage-aid programs for middle-income families wanting to join a condo conversion.