Why Condos aren't a successful
ownership product type?

In Asia and Europe, condominiums have been a very successful housing solution, allowing for wealth building and denser urban forms. However, their success in the American continent has been limited. COSTAR's insightful article highlights the legal complexities surrounding warranties in Condominium development, rendering it a high-risk endeavor that discourages developers. A prime example of this is the notorious 188 W James St San Jose project, where numerous issues arose. Several additional factors contribute to the low feasibility of Condo Development when compared to  other ownership products like tract development and townhomes, which seem to be the most popular product types for many developers.

Build it all: The developer needs to build the entire building before being able to get an occupancy certificate to be able to sell. Whereas as townhomes, you can phase out 5 to 10 unit, sell and build more. The Overall building cost is lower due to construction type, allowing buy customization and lower financing risk. 

HOA Burden: For buyers, the high monthly HOA fee due to the building type adds to their financial burden, which is usually higher for Condoniums vs townhomes. This fee covers ongoing insurance, operating costs, some deferred maintenance and property management.  Additionally, the uncertainty surrounding HOA board seats, due to voluntary participation and increased liabilities associated with the building type creates high uncertainty for potential buyers.

Mismatch in living spaces and urban amenities: Most American cities lack the infrastructure and amenities tailored to family life. The absence of thoughtfully designed private open spaces, adequate storage, and convenient parking in condominiums makes long-term living challenging for many families, hence not the fist option for a home purchase. This shortcoming limits the appeal of these residential units to specific demographics, primarily young individuals and seniors. Furthermore, these demographics may not possess the financial capacity to invest in such properties.