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By Giulia Carbonaro
Senior Reporter
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West Hollywood residents living near an abandoned, half-built condo have been haunted by loud night-time howling and unnerving scuttling... Their new neighbors? A pack of coyotes that has taken over the stalled construction site.
What is now being dubbed “coyote condo,” at the corner of Spaulding Avenue and Romaine Street, was once billed as a four-story, 22-unit residential condominium development. Works started in earnest in 2017, but residents report that the project stalled several years ago, while an Instagram account associated with the development has not been updated since July 2022.
First, the abandoned condominium development was just “a big eyesore,” as one resident told ABC7. Now, it has turned into something of a nuisance, as residents complain about being unable to sleep at night due to the animals’ howling.
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But the bizarre tale of this unfinished condo in Los Angeles is part of a much larger story about the decline of the once booming U.S. condo market, the disappearance of which threatens to make homeownership even less affordable for already struggling Americans.
From Boom to Burst: Whatever Happened to the Condo Market?
Nationally, condos have never dominated the housing stock, which has always focused on single-family homes instead, Chen Zhao, head of economics research at Redfin, explained.
But over the past several decades, condos became increasingly more important for American would-be buyers, offering a relatively affordable alternative to step onto the property ladder, and their availability across the country increased.
“Census data shows that multifamily buildings with five or more units, the closest available proxy, rose from about 11 percent of housing stock in 1960 to roughly 17-18 percent by 2000, and condos specifically have typically landed in the high teens to low 20s percent of for-sale inventory nationally,” Zhao told Newsweek.
The 2000s are when the condo market boomed at the national level. That average, however, masks significant local variations. “Condos can be 30 percent to 50 percent of listings in Florida and older urban cores, but barely register in Sun Belt and Midwest metros built mostly on detached single-family homes,” Zhao said.
But while the 2000s condo boom represented something of a peak for the condo market, the number of units available has been drifting down ever since.
“Condo construction has slowed in recent years as demand has softened,” Joel Berner, senior economist at Realtor.com, told Newsweek.
“The cost-effectiveness of condo ownership has waned as condo fees and insurance premiums have grown across the country, and we’re seeing condos struggle to sell in most major markets. Builders are wary of ending up with units they can’t sell, so they’ve pulled back on condo construction,” he added.
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According to Zhao, “the last real condo boom ended with the 2008 financial crisis, after which construction defect liability became a major deterrent since builders can face lawsuits for up to a decade after completion, a risk that doesn’t apply to rental apartments,” she said.
Construction defect liability laws, which exist in many states including California, generally allow condo owners or homeowner associations to sue developers over alleged building flaws years after a project is completed.
Many of these laws predate the 2008 housing crash, including California’s Right to Repair Acts, passed in 2002. But since the Great Recession, industry groups and researchers said they became a much more prominent concern, as the condo market struggled to recover and builders increasingly shifted toward apartments.
In the past couple of decades, developers have increasingly argued that the extended liability period can lead to higher insurance costs and legal exposure long after a project is finished, making for-sale condos a less appealing option than rental housing.
One state in particular shows how severe this situation has gotten since then: Colorado.
“Condos were about 20 percent of the state’s new housing market in 2005 and are around 2 percent today,” Zhao said. “The 2021 Surfside collapse added a second hit, pushing states toward stricter reserve and inspection requirements that have spiked insurance and HOA costs, especially in Florida,” she added.
The Florida beachfront condominium in Surfside collapsed in the middle of the night, killing 98 people in 2021. A federal report said that the building had been vulnerable from the start.
Zoning, which has hindered new residential construction for all types of homes and was targeted by the bipartisan housing bill which recently became law without President Donald Trump’s signature, has also represented a significant obstacle to the construction of new condos.
“Much of the available land that condos could be built on is zoned single-family-only, meaning that condos are illegal to build,” Berner explained.
“Multifamily-by-right land is often located in city centers, where the land is much more expensive. The result is that it’s especially difficult to deliver affordable or mid-priced condos, which is why we often see luxury condos or none at all,” he added.
Not-in-my-backyard’s (NIMBY) attitudes from residents of single-family home neighborhoods also represent a challenge to land being upzoned to allow for condo construction in areas of the country “that could really benefit from it,” Berner said.
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“NIMBY opposition adds friction, stretching permitting timelines and costs even where density is technically allowed,” Zhao said.
“That drawn-out process disproportionately squeezes out smaller developers, the ones more likely to build for-sale condos rather than large rental projects backed by institutional capital,” she added.
States like California have started upzoning through bills like SB 9 and SB 79, but that only addresses where density is legal, Zhao said, not the separate liability and insurance issues driving builders toward rentals instead of condos.
What Does the Condo Decline Mean for Americans?
Condos “have played a specific structural role” in the U.S. housing market until now, according to Berner.
“They’ve been the entry rung of the homeownership ladder: the affordable, lower-maintenance alternative to a detached house, especially in dense or expensive metros, and a common landing spot for first-time buyers, downsizing retirees, and people priced out of single-family homes,” he said.
If that supply keeps shrinking, “more people, especially younger and middle-income buyers in urban markets, get stuck renting longer,” Zhao said.
“It also means multifamily construction increasingly shows up as rental rather than ownership supply, pressuring the national homeownership rate down over time,” she added.
“That squeeze will land hardest in dense coastal metros, where condos were never optional, widening the affordability gap with Sun Belt and Midwest markets that still have single-family supply to lean on.”
The disappearance of condos would make breaking into homeownership even harder for first-time buyers, who already struggle to find starter homes, Berner said.
“This means entire generations struggling to get started with building home equity. It would also mean that sustainability goals would be compromised, as multifamily buildings are significantly more resource-efficient than single family homes on a per-resident basis,” he added. “This will result in more emissions and further outward sprawl of homes.”
Contact Newsweek editors on this story: Ben Kelly and Yannick Demoustier.
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