Boston-based WinnDevelopment and the town of Andover struck a deal ensuring that 28 of 42 affordable apartments at Brookside Estates (pictured) would be preserved as rental housing and the remaining 14 sold as affordable condominiums during the conversion of the 168-unit development to condos.

The current strength of the condominium market in Massachusetts has a great many Bay State residents enjoying the benefits of new living options and price appreciation, but many fear if precautions aren’t taken it may soon be leaving others out in the cold.

The increase in condominium sales has been fueled predominantly by first-time homebuyers who can’t afford to buy a house and empty nesters looking to downsize. Market demand has not only driven prices up but also has spurred a wave of condo conversions. Owners who have traditionally rented out residential space are being faced with the fact that it may be more lucrative to sell their properties.

If condo conversions continue on their current pace, affordable rental housing may be a casualty in some communities. In anticipation of this possibility, many state agencies and municipalities are already taking precautions by pushing to preserve a number of affordable rental units for people who fall into low- to mid-level financial brackets.

“It’s certainly an issue that we’re concerned about because condo conversions directly threaten housing affordability by reducing the available supply of rental units, which drives rental costs even higher. This can act to freeze out those with lower and middle incomes,” said Mark Curtiss, managing director of the Massachusetts Housing Partnership, a self-supporting state agency that promotes more stable and diverse neighborhoods in cities and towns across Massachusetts through the development and preservation of affordable housing.

With the price of both buying and renting homes in the state at record heights, the need for affordable housing is great, but in the wake of the condo boom, rental housing has become paramount for those who have no other option.

“This is incredibly important because rental housing is literally the only choice for a large number of households in Massachusetts who don’t have the down payment or credit strength to buy a condo or a house. It’s a part of the market that has to be served, but it’s expensive to build new units and so nothing is being built at any scale for them. Existing units must be preserved,” Curtiss said.

Balancing Act

Many communities across the state are currently engaged in a battle to safeguard their affordable rental housing stock in the face of the condo conversion craze.

In Marlborough Al Lima, the town director of community development, has been partnering with state organizations and filing requests in an attempt to keep the community open to a variety of residents.

“There’s a pending request to weaken the condo conversion by ordinance. We have a program called the Marlborough Local Initiative Program through which we’re attempting to get private property owners to keep rental housing through imposing deed restrictions on properties for 15 years in return for a cash allowance of $8,000,” he said.

The Marlborough Local Initiative Program is a partnership with the state Department of Housing and Community Development that provides technical and other non-financial assistance to cities or towns seeking to increase the supply of housing for households at or below 80 percent of the area median income.

Andover is another community that has been feeling the crunch of condo conversions. Brookside Estates, a development orchestrated in the late 1980s by Boston-based WinnDevelopment, provided 168 rental units, 25 percent of which were required to be affordable under a comprehensive permit.

“Winn saw that the value of the project as condos would be higher than the value of rental units and decided to convert it. However, they had to negotiate with the town of Andover, which was very interested in retaining affordability,” explained Curtiss.

The town and the developers struck a deal that out of the original affordable 25 percent, a total of 42 units, 28 would be retained as rental housing and the remaining 14 would be sold as affordable condominiums.

“Andover is really a very progressive community in trying to maintain a diversity of housing stock. The permitting of this project really demonstrates that,” Curtiss said.

In fact, in 2004 Andover was given a leadership award by the Citizens’ Housing and Planning Association for its affordable housing efforts. In addition to Brookside, Andover, a town in which the median income is $98,000 and the median price of a home is nearly $500,000, has approved 459 affordable units in the last five years.

While a hot condo market is certainly a notable part of recent history, in years past similar market trends have emerged. The 1980s brought one of the largest condo booms, one that ultimately ended as a bust. Although there are similarities, fundamental dissimilarities indicate that today’s condo market is by no means a case of history repeating itself.

“The difference between then and now is that in the mid-’80s there was a great deal of new production of units. There were condo conversions, but there was a lot of new building activity and the activity outpaced the demand. Now it’s almost the opposite – there’s so little new production compared to that time and prices have continued to go up, which has made condo conversions even more attractive to owners,” Curtiss said.

A reported softening in the rental market in and around Boston and outlying suburbs is another factor that may be making condo conversions desirable. Although a decrease in rental prices would be a good thing for residents in need of affordable rental housing, Curtiss notes that it may not directly affect them.

“The rental softening is occurring at the higher end of the market, but at the lower end we’ve seen prices stay level,” he said.

Ultimately, although preservation of affordable rental units seems to be particularly necessary in response to today’s market trends, the state’s supply of housing should contain combination of rental housing and homeownership opportunities, according to Curtiss.

“I think that we need to have a healthy balance of rental and ownership housing in Massachusetts. The market should help to determine that balance, but individual towns need to be proactive in deciding what will work from them. But towns and policymakers shouldn’t err on the side of doing all rentals or doing all ownership housing,” he said.