![]() ![]() The broader real estate industry must also do more to educate common-interest owners and promote good common-interest governance. This would strengthen the maintenance outlook for many aging buildings. States could create additional requirements, incentives, or programs to bring existing condominiums up to that standard. For example, in order for units to be eligible for federal mortgage insurance, the Federal Housing Administration (FHA) already requires condominium projects to maintain a capital reserve equivalent to 10% of monthly unit assessments or an amount set by a reserve study (usually conducted by a licensed engineer). There is a great deal that the public sector can do to strengthen condominium governance. But it is critical that the risks of these models be managed and minimized through reforms to policy and practice. Younger and lower-wealth households need common-interest communities and other shared ownership models now more than ever, especially in high-cost cities. As low interest rates and a surge in demand for detached single-family homes send prices sky high, homeownership has become even more out-of-reach for people without generational wealth. The fate of common-interest communities is particularly acute in Florida, where such homes are 35% of all supply in the Miami metro area. metropolitan areas by population, condos and co-ops are already more than 10% of the housing inventory (Map 1). Not everyone can or wants to live in a detached single-family home, and that development model is unsustainable in the climate crisis era. The reality is that we can’t afford to abandon communal living and condominiums. To learn more about community ownership, see The emerging solidarity economy: A primer on community ownership of real estate Community ownership is a powerful tool not just for expanding ownership, but also for stabilizing communities disrupted by capital ebbs and flows, revitalizing them, and furthering economic, racial, and environmental justice. The condominium association collects fees for an operating budget and capital reserve that support the management of these assets.Ĭommon-interest communities are only one dimension of the universe of community ownership models for real estate. In high-rise condominiums, the “common elements” that are collectively owned and managed include building systems such as the roof, foundation, exterior walls, and elevators, and may include amenities like a swimming pool. ![]() The tragedy looms as a possible warning: We’ve let each other down, and it may happen again.ĭefining common-interest communities and community ownershipĬondominiums are a form of “common-interest communities” that enable individual owners to share ownership of assets. Now, the unexpected collapse of Champlain Towers South raises a set of safety considerations that may not have been top of mind otherwise. And after a year of COVID-19 lockdowns, households of nonessential workers may be revisiting their residential preferences for space and proximity to others as more workplaces offer remote work options. A slight majority of Americans prefer longer commutes if it means they can live in a fully detached house with no shared walls or other elements. Underlying these questions is the fundamental reality that communal living can be messy and uncomfortable. Was maintenance on the building deferred because the condo board, elected by the unit owners, had a short-term incentive to do so in order to retain power? Or are communities of individual owners, who are not real estate professionals, simply incapable of managing a complex asset like a high-rise building? Are American condominiums a 20th century experiment that have now reached a dangerous reaction point in the lab? has called into question whether bad governance played a role in the tower’s failure. ![]() The June collapse of the Champlain Towers South multifamily condominium tower in Surfside, Fla.
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