Chicago has recently been hit by a storm known as condo deconversion. This means that many real estate investors are purchasing condominiums and turning them into apartments. Until recently, this wasn’t something you saw very often. In fact, it used to be the other way around. This is actually forcing many residents who have bought units to leave their homes and search for new ones as investors purchase their buildings. This is all due to how popular Chicago’s rental market has become recently. This trend has become so big that even the Chicago City Council has chimed in on it, recently passing a Condominium Deconversion Ordinance. This ordinance is meant to decrease the number of condos that investors are allowed to purchase and increases the amount of “yes” votes needed from condo unit owners to sell the building from 75 to 85 percent. Of course, this doesn’t mean condo deconversion is going away in The Windy City.
Let’s take a step back at how this all started. Before the financial crisis of 2008, homeownership was in high demand. This meant that developers saw an opportunity in converting apartment buildings into condos. Once the crisis passed, real estate values dropped dramatically. Since many condo owners couldn’t sell their units, they’d end up renting them out instead. Much of today’s competition of condos versus apartments in Chicago is due to new amenity-filled apartments coming into the market that offer better rent in addition to amenities such as fitness centers, gathering spaces, outdoor grilling stations and plenty more.
Is condominium deconversion good for the city though? It depends on who you ask. Some would consider the investors who purchase these buildings to be heroes. For example, the sale of Dover Court allowed those that purchased condos pre-2008 to get their purchase price back and escape the life of being a landlord. Unfortunately, not everybody experiences the positives of these purchases. Deconversions have ended with many people being displaced, especially long term homeowners. Luckily some condo associations in the city have resisted sales, such as Lake Point Tower.
The question now is how long will this continue? You can find differing opinions depending on who you ask. As long as there is apartment space is needed, investors will likely continue looking to deconvert. But this also means that homeowners will continue to fight back, and that’s the greatest weapon they have. If condo-owners take the reins on their homeownership, perhaps they can deter investors from purchasing.