The construction of condominiums, historically a key pathway to homeownership, has seen a dramatic decline across California since the early 2000s. This statewide trend has significant implications for housing markets like Orange County, where affordable entry-level homeownership options are increasingly scarce for residents.
Between 2011 and 2021, only three percent of all new multi-unit housing built in California were condominiums. This figure contrasts sharply with Canada, a country with a comparable population, where condos constituted almost 40 percent of newly built multifamily housing during the same decade. Condominiums typically offer a more affordable route to homeownership, costing an estimated 15 to 30 percent less than single-family homes, and are often located in urban areas with proximity to jobs and transit.
Industry experts and housing advocates attribute this decline primarily to a 2002 state law, the Right to Repair Act, which requires builders to address construction defects for up to 10 years on condos, townhomes, and single-family homes. While intended to standardize repair processes and ensure safe construction, this law has, in practice, led to frequent and costly litigation. Lawsuits are particularly prevalent with condo buildings because homeowner associations can readily sue on behalf of all residents, often for minor or non-structural issues, contributing to extensive legal proceedings.
Assemblymember Buffy Wicks (D-Oakland) observed that the lack of condo production is a significant, often unacknowledged, problem in California homeownership. Muhammad Alameldin, director of growth for California YIMBY, a pro-housing policy group, stated that the current system incentivizes litigation, advocating for a system where defects are repaired immediately rather than becoming courtroom issues.
A broad coalition, including Habitat for Humanity, the City of Los Angeles, and the California Building Industry Association, has been working to reform the 2002 law. The goal is to establish clearer guidelines for repairs and litigation, thereby encouraging new condo development. Assemblymember Wicks, alongside Assemblymember Lori D. Wilson (D-Suisun City), sponsored Assembly Bill 1903 (AB 1903) to enact these reforms. Assemblymember Wilson, who previously worked for a home builder, indicated that she witnessed firsthand how litigation escalated costs for developers considering condo construction.
Despite widespread support, AB 1903 did not advance to a final vote before the legislative session concluded last month. This outcome represents a setback for proponents, though many remain committed to reintroducing similar legislation. Assemblymember Wicks noted via social media that modernizing laws is essential for increasing homeownership opportunities for Californians, expressing confidence in the ability to bring forth an even stronger proposal.
Most denser, multi-family housing complexes currently being built in California are apartments, which are governed by different construction liability laws. These rental units, while addressing housing needs, do not offer a pathway to homeownership, a crucial element for wealth building. High rents in some newer developments can also hinder renters' ability to save for a home.
Condominiums saw their first significant boom in California during the 1970s and 1980s as rising housing prices made multi-unit options more appealing for moderate-income buyers. However, after the 2002 liability law took effect, followed by the housing bust and Great Recession, condo projects never fully rebounded when construction activity resumed in the 2010s.
A 2024 study by UC Berkeley’s Terner Center for Housing Innovation found that California’s extended liability claim window and broad definition of defects increased litigation, driving up insurance and building costs. This created what the study called "a significant disincentive for developers and contractors to build new condominiums." Further analysis in 2025 indicated that multi-unit for-sale projects cost developers an additional $8,000 to $18,000 per unit compared to rental units, a disparity attributed to the “construction defect liability cost difference.”
As California confronts an ongoing housing crisis, marked by low homeownership rates and an increasing age for first-time buyers, lawmakers emphasize the importance of condos as a vital part of the housing stock. Assemblymember Wicks described condos as key to providing "a foot in the door for that first-time homebuyer," recognizing them as a significant component in addressing the state's housing challenges. Proposed reforms have faced opposition from homeowner associations and consumer advocates, who argue that changes to the Right to Repair Act could undermine protections for safe housing and shift responsibility from builders to homeowners.