On average, condo construction makes up 24 percent of all housing construction starts. In the first quarter, it accounted for just 5.5 percent, The Wall Street Journal reports.
It’s not that demand isn’t there. There are more Americans, especially the younger ones, who prefer to live in urban areas close to amenities, where a home in a multifamily building is within easier reach than a single-family home.
“But there are constraints on getting off the ground at every turn,” Peter Lauener, President of Intracorp Cos., who built thousands of condominiums from 2002 to 2008, told The Wall Street Journal. Since the bust, the company has built none.
Tough rules on condo mortgages and fees that were enacted after the housing bust shifted toward rentals, thanks to the demand of young buyers.
The Wall Street Journal contends that the lack of condo construction is a missed opportunity in housing’s recovery –condos serve as entry-level housing for young buyers and give builders the opportunity to pay down debt with every closing, as compared to rental buildings.
So far, condo construction and closings have only boomed in cities such as Miami and New York, where condos designed by Ferrari designers or branded with luxury labels such as Fendi are targeted to affluent foreign buyers, investors, or local higher-end clientele.
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