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CENTURY CITY, CA-Buyers yearning after the American Dream of owning a home, coupled with high construction and land costs will keep the Southland’s condo craze aflame, particularly in the Los Angeles market. That was the consensus according to industry insiders at RealShare’s Apartments 2005 Conference, held at the Century Plaza Hotel yesterday. One of the more intriguing panels was titled, “The New Big Thing: What’s Driving the Boom in Condo Development & Conversions.” Ellen Berkowitz, a partner with Manatt, Phelps & Phillips LLP, moderated the panel.Ground-up construction has become nearly unaffordable in Los Angeles, which, according to the panelists, is driving the condo conversion market. William Witte, president of The Related Companies of California pointed out that construction costs have inflated 25% in the past four years. “This makes ground-up construction almost impossible, especially in expensive areas,” Witte said. Even with interest rates at record lows, ownership of the single-family home remains out of reach for most residents, due to a lack of product and high prices. Instead of renting, many buyers will opt for the more affordable option of condos, when possible, according to panelist Nancy Sulse, vice president and regional manager of Fremont Investment & Loan. “The incentive (to own) is twofold,” said Sulse. “One, it is the American Dream. And two, for the average American, it is the only tax break you will get over the course of your working life.” Sulse added that homeownership has been outperforming many of the more traditional forms of investment in recent years.Another panelist, Steve Otos, senior director of Pacific Security Capital, said aging baby boomers are starting to have a major impact on the condo market. Armed with a lot of money and an empty nest he said that many seniors are looking to condos to downsize and for investment properties. “There is an aging demographic with a lot of wealth. Some retirees are buying 3 or 4 condos,” Otos said. While talk of an impending bubble was touched upon, the panelists agreed that Southern California’s demographics, with an expected population growth in the multiple millions, is likely to offset a major drop in the market.RealShare’s Apartments 2005 Conference drew 1,200 owners, investors, developers, brokers, lenders and professionals who are involved in the multifamily market and related activities. The all-day conference and networking event kicked off with opening remarks from Jonathan Schein, president and CEO of Real Estate Media. Another highlight was Real Estate Media editor-in-chief Michael Desiato’s in-depth interview of Marcus & Millichap president and CEO Harvey Green in the conference series’ popular segment, “Inside the Real Estate Mind.”

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