The Fall of the American Condominium — it’s not just the millennials. We Need a Better Co-Housing Model. My Story and More.
Condominiums have been around a lot longer than you’d think, at least since the 1880s in the USA and the 1920s in Europe, and there is evidence that the Romans developed the concept in ancient times.
In the USA, condominium ownership took off in the 1960s and 1970s as working, middle class, unmarried people and young married couples sought a piece of the home-ownership pie without the costs and labor required to purchase and maintain single family homes, and for the urban social life that often goes with co-housing. While New York led the way in cooperative living (residents owning shares of the land owning corporation), Puerto Rico was the first place within the USA, and Utah was the first state, to initiate condominium law, the law necessary to take airspace, historically legally assigned to the underlying land owner, and allow it to be chopped up into legally identifiable units and sold to others.
Landlords contributed to the boom as well. The 1960s and 1970s saw a lot of lawsuits decided against slumlords: the courts stopped landlords from hiding behind secret land trusts and withholding heat or reasonable maintenance. Landlords, hoping to finally cash out and lose the increasing maintenance burden of building ownership, were happy to covert their buildings and let them become someone else’s problem.
At my title company jobs, I saw years of condominium developments and conversions and it looked like there would be no end to it as old buildings were rehabbed or torn down to create new condominiums. Eventually, buildings were built where no urbanites had ventured before, next to noisy commercial developments, highways and railroad lines, smelly factories, and operational farms. Suddenly, in the late 2000s and into the 2010s, condominium de-conversion became the rage followed by scads of articles about the millennials who just preferred yurts and glorified trailers repackaged and marketed as “tiny homes.”
While there are some young people who like the idea of small, independent housing, I’m convinced by my own experience as a long-time condominium owner and real estate lawyer that there’s more to the story, that the condominium as a co-housing movement became unsustainable under the weight of its own problems.
- High maintenance costs. I think condominium advocates would be hard-pressed to explain how monthly condominium maintenance assessments that are larger than the average monthly mortgage payment for a unit are sustainable. In my last urban condominium search, I saw monthly assessments of $1000, $1200, $1600 and $2000. If you add in an $800 to $1200 (or more) mortgage payment, and the cost of utilities and parking, often not part of the maintenance assessments, a potential unit owner can be looking at a base housing cost of $3000 or more per month. That’s a lot of money for the young professionals or older empty-nesters to pay every month solely for housing. Over the years, more than one realtor has tried to convince me that a building with high monthly assessments is a great buy because it means the building maintenance account is adequately funded. Great, but that doesn’t help people who can’t afford $3000, or more, every month.
- Low Maintenance. Realtors’ responses to high maintenance costs bring up the next problem, low maintenance costs, or high costs not correctly allocated to maintenance. Units in improperly maintained buildings become an albatross for owners because a sole unit owner doesn’t have the decision making power to fix things. I lived in a building where the hot water heater broke for days at a time at least twice each month. Finally, it died. Calls to the management company were futile because the condo board of this multi-building condominium development decided it was too expensive for the development to coddle one group of owners in one building by giving them hot water. Coincidentally, none of the board members lived in the cold water building. Oddly, the board managed to convince a couple of the unit owners in the building that they didn’t need hot water, a luxury. I had to do a lot of talking to convince people that their resale value just hit rock bottom, and still none of the other unit owners in the building made the fuss that I made, and it took a lot of fuss, but they finally installed a new water heater when I threatened to go to the local paper about the poorly maintained flagship development.
- Low maintenance leading to sudden high maintenance. Years ago, a friend ran for president of her condominium board on the platform of stepping up maintenance. She felt previous boards let the building go and she and her supporters had developed a long wish list. Once elected, they put their rehab plans in motion. Now, that’s all good, and even smart from one point of view, but the unintended impact on some neighbors became a major issue. There were a few people in the building, older, sick, on fixed incomes, who were priced out of their homes with no where to go. The all-systems-go board took out it’s hostility against one such woman in particular. They told her to pay or move. The problem was that she couldn’t pay or move. She was on disability and had inherited the unit from her parents along with other siblings who didn’t live there and wanted her out so they could cash out their inheritance. The woman couldn’t afford to move anywhere on her share. This situation was only resolved when the poor woman died, roughly a couple of years later. She spent her final months harassed by the well-meaning, logical, rational, and right for lots of reasons, building maintenance police.
- Fire, flood and other disasters. I had the fun opportunity to live on the 7th floor of a 28-story building with my 87-year old cancer patient father that constantly flooded due to a poorly designed fire suppression system. Prior to that experience, I lived in another building that had a fire and we all prayed that the fire suppression system would not go off because what’s worse, the fire or the flood? I’m not advocating to eliminate these systems. I imagine the sprinklers save lives, but problems with these systems are frequent as the polar vortex converts the Midwest into Antarctica. The first (internal wall) broken-pipe flood took out all 3 elevators in the building and flooded several units including my dad’s. Seven floors were an annoyance for my then 59-year old bones, but insurmountable for my dad. A climb of 28 floors was impossible for many residents. Only a few brave college students make the trek. Poor Ida, a nice lady in her 70s, had to climb up and down 13 floors for days. I met her hyperventilating in the stairwell. Building management got one elevator operational but the board president was on his annual extended vacation in a warmer climate. He became the condo equivalent of Chicago’s Mayor Michael “It will melt.” Bilandic after the blizzard of 1979. The building president was, apparently, busy soaking up the sun and delayed signing the contracts necessary to fix the elevators, and more important, for the HVAC repairs… which led to flood #2. Flood #2 took out a bank of units, including ours (again), and this time was worse. Repairs were extensive, insurance claims were made, the condo squeaked out of some of the maintenance it owed under the declaration by simply refusing to pay it and ignoring phone calls. Sure, this story is merely anecdotal, but the same thing happened in many buildings in Chicago and the near suburbs. In a neighboring building, one unit lost most of the kitchen, all the cabinets fell in the flood, broken china and glass everywhere, broken appliances, the whole works. Last time I heard anything about it, the unit-owner had threatened to sue everyone in the building. Her neighbors urged her to use her insurance but she feared she’d be uninsurable after the claim, and she may not be wrong. Which leads me to a problem, mainly in Florida, but spreading…
- Inability to get affordable insurance. Condominium buildings in high risk flood or earthquake or other disaster areas can’t get affordable, or any, insurance. With climate change, how long is it before that uninsurable area becomes your neighborhood?
- Flood #3 and the delight of shared pipes and walls. The third flood in three months in my dad’s building was caused by a workman. He drilled through a fire suppression system pipe while remodeling a unit on a high floor, taking out an entire bank of units all the way down. I met the poor guy in the elevator that day and he confessed what he had done, assuring me that his career was over. I felt sorry for him, my compassion increased as the damage was sustained on the other side of the building. I don’t know if I could have handled 3 flood remediations and our insurer would have dropped us. I felt sorry for all those unit owners too. I knew what was in store for them, filthy, roaring fans, and huge dehumidifiers, drying out the drywall and their sinuses, for weeks. Their other choice would be mold and complete replacement of the drywall. I know that because the condo manager told one of the Flood #1 severely affected unit owners to let the drywall air dry. She ended up with mold and wall removal. Not her decision, but her consequences. It’s no fun sharing pipes and walls and decision-making authority with people who do not care about you. And speaking about people who don’t care about you….
- Your neighbors can sell your unit out from under you. The Board can sell you unit for unpaid assessments in a legal proceeding that’s a cross between an eviction and a foreclosure. And, your neighbors can sell your unit, together with the entire building, if enough of them agree to sell. In Chicago, Mayor Lori Lightfoot is trying to raise the percentage of owners required to vote in favor of a full building sale because so many people with no where else to go, perhaps underwater on a mortgage, have lost their homes in this current condominium de-conversion craze. On the flip side of the issue, a lot of unit owners want to de-convert and sell to a Landlord because of the high cost of maintenance and all the other problems associated with condominium living, proving there’s nothing new in this world.
- Representing condominium unit owners. In addition to being a long-time condo unit owner, I’m a real estate attorney and have represented people buying and selling condo units. Common impediments to sale and purchase of condo units include mistakes in condominium documents that affect unit size and configuration or storage or parking, badly drawn budgets, high monthly assessments, high special assessments, ongoing maintenance projects, lawsuits among the board and unit owners, ill-conceived or unfair parking and storage arrangements, condo board member profiteering, outrageously expensive move-in and move-out fees, outrageously expensive documentation fees, inept and inattentive managers who don’t timely schedule declaration or bylaw mandated inspections or moves, and boards that use sales as leverage to exact payments that may or may not be owed.
I’m not a millennial by a long shot, and I am not a gardener or handy person. I like the idea of sharing those costs and having others do or schedule the work. Sometimes it’s hard to find professionals willing to do a small job in a single family home. However, I never want to live in a high rise condo again. Now, I live in a townhouse condo, still a condo and not by choice, and I’m not excited about our shared wall and sleeping next to a neighbor’s garage. I don’t like the current state of condo living.
After decades of living in condominium units, and representing condo sellers and buyers, the problem with condominiums (at least in my humble opinion) is not the rise of the millennials. It’s the rise in maintenance costs and the increased difficulties of condo governance in a society that does not value community or compromise. These condominiums are usually ruled by the same small minority of residents, for years or decades, and it’s not their fault because no one wants to attend meetings, vote or run for the board much less board president. When a new regime comes in, they’re hot to make long-needed improvements and don’t carefully consider the impact on all the residents.
You may conclude this rant to be firmly against the idea of co-housing or advocating that everyone go out an buy a country home. That can’t be further from the truth. I believe that co-housing is increasingly important with population growth, lack of housing inventory, broken families and communities, and an aging population. I think we haven’t prioritized co-housing to the extent the issue deserves. We don’t have great co-housing models. A potential solution might be the old-fashioned, New York style co-op, where people own shares in the land owning corporation, choose their co-housing mates and take action as one. The downside is racism and classism that exclude many who need co-housing. I’m reminded of “The Coops” in 1950s-1960s New York City that were run a little bit like a kibbutz or commune, living there wasn’t participation free, and it worked well before developers seeking fortunes in New York land values gentrified some neighborhoods while shoving the displaced into fewer and poorer neighborhoods. No matter what solutions are chosen, people should be more mindful of their behavior toward their neighbors in their co-housing community.