The Condo Problem

According to media reports, condominium buildings around the country are running into what can best be described as "checkerboard" foreclosures. First one or two condo owners fall into financial trouble, and fall behind on their payments to the homeowners' association that manages the building. That means that the remaining owners are assessed more money to cover the bills that need to be paid. Those assessments increase the financial strain on other condo owners, so more fall behind, and the problem escalates from late payments to foreclosures.

Condos have always seemed to me to be "the property that you never really own." Yes, you own a few rooms, but if you stop paying the homeowners' association's fees, you can lose your property, even if your mortgage and property taxes are paid. If you disagree with the policies of the homeowners' association, tough luck--your options are to sell your condo or shut up. If the homeowners' association does a lousy job of maintenance or landscaping, again, tough luck. What's more, some homeowners' associations actually have veto power on who you can or can't sell your condo to.

I'm as much a fan of high-density living in cities as anyone, but condos are a sign of the American dream of owning your own home run amok. You can have the illusion of owning your own home, but in fact, homeowners' associations are little more than landlords. In some buildings, once enough people abandon condos to foreclosure, we'll see them transform back into what they once were--apartments. And then, the people who were displaced when their apartments were turned into condos and sold to the highest bidder will have the last laugh.