America’s Condo Market Is Unraveling, As Coyotes Move In
Condos have long offered first-time buyers an affordable way to step onto the property ladder but are vanishing from the market.
West Hollywood residents living near an abandoned, half-built condo have been plagued by the night-time howling and unsettling scurrying of coyotes. The site, known as "coyote condo," once promised to be a four-story, 22-unit residential condominium development. Construction began in earnest back in 2017, but has since stalled, and the project's Instagram page has been silent since July 2022.
This bizarre situation is reflective of a larger issue: the unraveling of America's condo market. The condo market, once booming, is now experiencing a decline that threatens to make homeownership even less affordable for struggling Americans. Condos have historically been more appealing to those seeking an affordable alternative to homeownership, but their availability across the country has been inconsistent.
While condos once accounted for roughly 17-18 percent of the for-sale inventory nationally, their share has been on the decline. In the 2000s, condos were a significant part of the housing market, especially in urban cores and certain Sun Belt metros. However, since then, condo construction has slowed as demand has softened and the average cost-effectiveness of condo ownership has diminished due to growing condo fees and insurance premiums.
The last real condo boom ended with the 2008 financial crisis, after which builders faced a construction defect liability risk. Lawsuits can be filed against developers for up to a decade after completion, deterring potential builders. This liability, combined with a shift towards rental apartments and a reluctance towards extended liability periods, has led to a decrease in new condo construction.
Colorado serves as a prime example of the decline in condo construction, with the state's share of new housing units dropping from around 20 percent in 2005 to 2 percent in 2021. Zoning has also played a significant role in hindering new condo development, with many areas zoned exclusively for single-family homes. This not only makes building condos illegal in those areas but also increases insurance and HOA costs, particularly in Florida, where the 2021 Surfside condominium collapse resulted in 98 deaths.
NIMBY attitudes and zoning restrictions have further hindered condo construction, particularly in desirable areas where condos could be built affordably. Upzoning efforts, such as those in California through SB 9 and SB 79, have been made, but they only address where density is legally allowed, not the liability and insurance issues that are driving builders towards rental housing instead of condos.
Condos have historically played a specific structural role in the U.S. housing market, but their decline poses challenges for affordable homeownership options for Americans.
Written by urgent.news from Newsweek's reporting — not their text. Machine-written — it may contain errors, so check the original before relying on it.
