Aging Condos Are a 'Ticking Time Bomb' and Need More Oversight
It’s not just condominium buildings that are showing their age, as was the case in the deadly collapse of a condo in Surfside, Fla. The condominium form of ownership itself is under strain. Some condo buildings are even being “de-converted” to rental properties—including the 391-unit 1400 North Lake Shore Dr. in Chicago, which was bought by a New York developer in 2019 for about $107 million.
Some economists argue that the U.S. and other countries made a mistake by going too heavily into condos and related forms of ownership, including housing co-ops and homeowner associations, in the decades after World War II. Some 73.9 million Americans lived in condos, housing co-ops, and HOAs in 2019, according to the Foundation for Community Association Research. The shared form of ownership is also popular in Europe, Israel, Australia, China, and Russia, among other parts of the world, says Amnon Lehavi, dean of the Harry Radzyner Law School of IDC Herzliya in Israel.
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The rap on condos is that owners and the boards they elect are poorly equipped to make important decisions about maintenance. “Association homeowners and boards often are focused on keeping regular assessments low and only investing in visible, immediate outcomes,” says Breaking Point: Examining Aging Infrastructure in Community Associations, a 2020 report by the Foundation for Community Association Research.
This bit from the report will sound familiar to condo owners: “While homeowners will tolerate a modest special assessment in an emergency, evidence in this study suggests that it’s often hard to convince them to contribute to long-term maintenance, i.e., higher regular assessments. Substantial special assessments are particularly unwelcome.”
https://www.bloomberg.com/news/articles/2021-07-06/aging-condos-are-a-ticking-time-bomb-and-need-more-oversight
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