economy
March 13, 2026
The Great American Condo Crisis
If the U.S. wants to remain a nation of homeowners, it has no choice but to start building condos again.
TL;DR
- Condos, once an affordable housing alternative to single-family homes, are becoming scarce in the U.S.
- Factors contributing to the decline include complex zoning, lengthy rezoning processes, and additional developer fees for condo projects.
- The federal tax code imposes higher income taxes on condo sales compared to capital gains taxes on apartment sales.
- Post-recession, tighter lending standards and increased litigation over construction defects have further stifled condo development.
- Countries like Canada have more robust condo markets due to more favorable policies regarding litigation, financing, and presale rules.
- Policy changes, such as those being considered in California, Colorado, Hawaii, and Washington, could help balance construction-defect laws and improve presale financing opportunities.
- The U.S. could learn from international models that successfully promote condominium construction to expand housing supply and support urban middle classes.
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