Quiet Horror of Condo Associations in Housing Collapse

Condos for Rent

Toronto   I’m not saying that everyone is asleep at the switch on what is happening in condos in the housing crises of the Great Recession, but I think we can all agree that the issue is not front and center.  Fair enough?

Nonetheless, when housing foreclosures rob any notion of the “ownership” society that President Bush (G.W.) used to trumpet, that also means that tens of thousands, more likely hundreds of thousands, of condo owners also go underwater and lose their places.  We may not see the vacancies from the street as easily as we see the rows of for sale signs in some suburbs, but it is happening.  Most often this means that these condos in the current market become rentals, so those families holding on to their places are pushed further and further to the status of a small minority of owners in a complex filled with renters.

The entire condo association model is a classic problem of the “commons.”  The association, composed of owners, governs the development and that also means assessing the costs for common projects from maintenance of the common space to other critical necessities (replacing a boiler, fixing the roof, obtaining security, whatever).  Condos 30 years ago might have been something for the well to do, Miami Beach crowd, but now they are ubiquitous as a real estate device, including among low and moderate income families.   In the 70’s I used to think, wouldn’t this be a perfect thing for us to contract trained and skilled community organizers to service and maintain the organizational practice of condo associations.  Then, the income divide was too large between the buyers and the likes of ACORN organizers.  Now, I’m not so sure.

All of this was brought home to me as I listened to several leaders at the annual ACORN Canada meeting and board session make a presentation about the problems they were having as the “last owners standing” in their condo associations.  They were talking about how to get control of the bulletin boards, subcontracting, and governance.  One leader had written thousands of letters to city and housing officials in Canada and the USA trying to convince people of the need to amend the governing bylaws of condo associations.

These are real issues and without action across North America, we could wake up and find multi-unit buildings in tenant dominated cities, whether Toronto or Chicago or Phoenix, that are little more than empty shells with a few owners trying to hold on and steer associations that might have been interesting in principle, but are becoming disasters in practice, as developers run away and complexes teeter on the brink.