The Voice of San Diego has this report on the condo market. "A couple of weeks ago, Bob Pinnegar was discussing with his colleagues what to call the phenomenon in San Diego real estate: the condo conversions that are now reverting back to rental units."

"Pinnegar, executive director of the San Diego County Apartment Association, isn't sure if they ever pinned down a final moniker. But he does know that everyone in the business is asking what's going to happen to all the people who jumped on the condo conversion bandwagon in San Diego, only to find a sinking condo market at the end of the road."

"Many developers in the niche market of condo conversions bought apartment buildings at high costs, but now find themselves left with little option but to put their units back into the rental market, hence conversion-conversions."

"'"It's sort of a game of musical chairs, and those who were the last ones to find a seat are going to get hurt,' Pinnegar said."

"As more and more condo conversions and new condo projects have come on the market, developers have faced tighter competition to sell units. That's led to falling prices in the condo market and a glut of condo conversions with fewer and fewer buyers to go around. More than one-third of the 23,221 homes currently listed for sale in the county are condos, according to a real estate brokerage firm."

"'The condo market's weak,' said Alan Gin, professor of economics at the University of San Diego. 'On the supply side, there's been an overdoing of the conversions, there's probably too much out there and you see that by these people trying to pull supply off.'"

"(Consultant) Gary London estimates that there are 7,000 to 10,000 condo conversions in the pipeline for the city of San Diego alone. He thinks many of those properties will revert to the rental market. For companies who bought into the conversion craze late, that could spell trouble."

"'There was a glut of purchases of apartments over the past 36 months, in the past 18 months in particular, where the price that was paid for the building could only be justified by converting the units,' London said."

"Kent Williams, who manages the San Diego office of (a) real estate brokerage firm, said his company is being approached by many investors and companies looking to offload their planned condo-conversion properties."

"'They can't take them to the market and sell them as individual condos, so they're coming to us and probably other brokers and saying 'I want to sell these as a bulk condo sale.' We're telling them there's really no premium for that; it's really an apartment building,' he said."

"Chuck Hoffman, president of Apartment Consultants, Inc., cited as an example a small apartment building in North Park that has sold four times in six years. The building sold in March 2004 for $2.1 million to an investor who planned on converting the property to condos. The investor spent tens of thousands of dollars getting the building permitted for condos but then decided to bail on the project as the condo market slumped."

"He then sold the property as an apartment building in May 2006 for $1.7 million, netting a loss of at least $365,000."

"Condo conversion-conversions are not a new phenomenon. Industry players said they’ve seen this happen before in response to other market shifts."