Condos going rental amid housing downturn

August 23 2008 - Real estate sales in the suburbs are so bad that developers of condominium buildings - as well as owners of existing units - are renting apartments to avoid foreclosure.

In Des Plaines, a developer whose for-sale building is almost finished is negotiating to restructure his construction loan and switch the units to rentals.

“We expect to see quite a bit of this,” said Steve Hovany, president of Strategy Planning Associations Inc. of Schaumburg, comparing the situation to the condominium boom and bust of the 1970s. “It shows what the housing bust really means for condominium buildings.”

The 60-unit building at 595 S. River Road in Des Plaines owned by Sphinx Chicago Properties is 90 percent finished, said Kymn Harp of the Chicago law firm Robbins, Salomon & Patt Ltd., which represents the developer. Fifth Third Bank has filed a foreclosure suit in Cook County Circuit Court, and the developer is negotiating to extend the loan so the building can be finished as rental apartments.

“It’s not unusual,” said Harp. “The market is terrible. There are so many condominiums on the market. The building got started in the heyday.”

Any pending sales will have to be canceled for the building to be rental, he said, but the attorney thinks most of the early buyers were investors who are anxious to get out of the deal.

Condos going rental amid housing downturn
by Deborah Donovan | Daily Herald