Condos are often an affordable alternative for first-time homebuyers, particularly as home prices continue to climb. Yet, a variety of factors are discouraging builders from putting up more of them.
In the multifamily market, condo construction accounted for only 7 percent in 2016, according to Census data. Christa Huffstickler, president and CEO of real estate firm Engel & Volkers Atlanta, says the lack of condo construction is keeping many younger households from entering the buying market. Realtor.com reports that of the few condo units being built, most are luxury units in expensive cities, which first-time buyers cannot afford.
In some areas, builders say they’ve held off on condo construction because of state laws that they say make it too easy for buyers to sue over alleged construction defects. As a result of the lawsuits, builders in the red-hot housing market of Seattle are putting up plenty of rentals, but few condos, says Jan Himebaugh, government affairs director for the Building Industry Association of Washington.
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