We’re seeing quite a few condo units being converted to rentals in order to take advantage of a potential upswing in rental rates.  Meanwhile very few new units have been put into construction.  Once current inventory is depleted we’ll have a race for developers with entitled properties to bring them to market.  Financing here will be the key determinant. -Derek

Last year was a dismal period for selling units at the Ellington, a luxury highrise condo building near Oakland’s Jack London Square. But with about a dozen offers coming in during the first month of 2011, this year seems much more promising.

“Prices have adjusted across the board to where they really are making sense, interest rates are super low, and buyers know that the stars are not going to be lined up like this forever,” said Kim Cole, vice president of sales for Pacific Marketing Associates, the firm handling sales at the Ellington.

Oakland and Emeryville had about 360 new condo units on the market in January, a steep drop from 572 during the same month last year, according to Polaris Group, a condo marketing and research group.

The market was flooded with thousands of new condos during the real estate boom that ended in 2008 and thanks to Oakland’s 10K initiative that aimed to bring 10,000 new residents to the city’s core.

That inventory has been slow to evaporate despite falling prices and attractive interest rates. At least 1,100 units built in the past four years were converted from condos to rentals.

Early last year, tax credits prompted many buyers to make deals, but that incentive ended by May and sales once again took a hit, Cole said.

At the Ellington, about half of the building’s 134 units have been sold.

The building is offering one-bedrooms from around $300,000 to $600,000 and two-bedrooms from $600,000. The property also has three of five penthouse units left with prices ranging from $1 million to $1.6 million.

The Ellington, like several other projects, has been on the market for about two years.

Others include Pacific Cannery Lofts, which has about one-third of its 163 units still available. BayRock Residential’s Eight Orchids is down to 22 of 157 units available.

Adeline Place, a 36-unit project developed by Placeworks LLC, is close to selling out with only two units left.

Cole, of PMA, says it seems buyers finally feel now is an opportune time to buy.

Even so, the larger market — still plagued by short sales and foreclosures — is weighing down on the condo market, said Chris Foley, principal of Polaris.

Foley estimates that it will take 18 months for currently selling projects to sell out. The only new product to open this year is the 88-unit Uptown Place, formerly known as Thomas Berkley Square, that was purchased last fall by Canyon Johnson Urban Funds.

“The big picture is you have to put stability in the market place,” Foley said

via Condo sales on the rise in Oakland | San Francisco Business Times.