An analysis of the Cambridge condominium market after rent deregulation

Abstract

The condominium has become a popular form of ownership in Cambridge as it provides attractive benefits of homeownership without the physical responsibilities of maintaining a detached single-family home. Furthermore, as it is often a less expensive form of homeownership than single-family housing, it enables moderate income, first-time home buyers to have comparatively easier access to homeownership. During the time when much of the rental housing was under the rent control, condominium conversions were a means of releasing housing from the controls. Many of the landlords sought to convert their housing to condominium units even after strict ordinances were passed to limit the sales of such condominiums. This study seeks to investigate and explain the condominium conversion market after the termination of rent control, during the years of 1995 through 1998. The first objective of this study is to investigate the spatial pattern of Cambridge and its neighborhoods with regard to distributions of rentcontrolled housing, converted condominium units, rent-controlled units that were converted to condominiums and the median sales prices of condominium units. The second objective is to examine further the neighborhoods and better understand the condominium market of each neighborhood. Using the data on rent controlled residential units in 1994 and residential condominium units assessed for the fiscal year 2000, we employed Geographic Information System to visually present the spatial housing patterns in Cambridge. Most importantly, we analyzed the phenomenon of condominium conversions after rent deregulation and the findings indicate that less than 2 percent of the rent controlled units in 1994 were converted to condominiums during the period of 1995 through 1998. Most of the conversions and new construction of condominiums were in five of the neighborhoods whose residents have relatively high income levels, and in which there are greater number of non-family households, young professionals, and owner-occupied dwellings. The pattern of sales price by neighborhood is also examined during the 1995-1998 period.