A recent article in The Atlantic titled “The Great American Condo Crisis” argues that the United States is simply not building enough condominiums and has never recovered after the 2008 Great Recession. That observation is correct for the overall national market, and for the reasons cited: tighter federal mortgage insurance requirements (FHA and Fannie Mae), the rise of schemes to prosecute construction defect claims, and local regulatory constraints related to zoning approval and platting. However, in many markets—including Texas—condominium development did not wholly collapse after the 2008 Great Recession. In fact, the period between roughly 2011 and 2020 saw a meaningful resurgence as capital returned and developers adapted to post‑recession conditions.
While there has been no loosening of FHA and Fannie Mae mortgage insurance requirements (actually they have become tighter, e.g., loss of marketing phases), construction defect claim schemes still exist, and it is more and more difficult to obtain approval for denser projects (a/k/a “nimbyism” is alive and well), the post-pandemic slowdown has added more roadblocks, namely tighter construction lending standards, rising construction costs, and persistent friction in local regulation. All these constraints have made condominium projects increasingly difficult to capitalize and develop—even as demand for attainable ownership housing continues to grow.
It is also important to recognize that condominiums are not simply an urban housing product. Across Texas and in other states, there is a need for condominium development in suburban markets, particularly inside large master‑planned communities. In these environments, condominiums can introduce price‑point diversity into communities that might otherwise consist entirely of higher‑priced detached homes. Smaller condominiumized homes or townhomes allow middle‑income buyers—and often first‑time buyers—to access communities that would otherwise be financially out of reach. At the same time, those buyers gain access to the amenities and infrastructure of larger communities—parks, trails, recreation facilities, and other shared assets.
Texas has taken at least one meaningful step to address the barriers that historically discouraged condominium development. In 2015, the Texas Legislature adopted condominium litigation reforms that I helped draft and shepherd through the legislative process. Those reforms addressed a litigation environment that had made condominium development unusually risky. The goal was straightforward: preserve legitimate construction‑defect claims while reducing the incentives for speculative litigation that had discouraged many developers from pursuing condominium projects.
Those reforms helped stabilize the environment for condominium development, but they did not resolve the capital formation and regulatory challenges that continue to affect new projects.
During the 2025 legislative session, two additional initiatives were introduced to address those remaining barriers. Unfortunately, neither passed.
Initiative 1: Allowing Construction Financing Through Protected Sales Deposits
The first initiative focused on capital formation. In many international markets—and in several U.S. jurisdictions—developers are permitted to use purchaser deposits to help finance construction, subject to consumer protections. Texas law currently does not clearly allow this structure. Legislation introduced in 2025 would have permitted condominium developers to use buyer deposits for construction financing with two key safeguards: clear pre‑contract consumer disclosures and bonding or similar financial protection for purchaser deposits.
This model is used in jurisdictions such as Florida, Tennessee, Washington (and as the article notes, possibly California!), and is accepted in global condominium markets.
The Texas legislation passed the committee 11–0, but did not reach a House vote before the session ended.
Initiative 2: Clarifying State Law on Condominium Platting
The second initiative addressed a less visible but equally significant issue: regulatory uncertainty at the local level, i.e., county and city. The Texas Uniform Condominium Act contains detailed provisions governing condominium creation, including platting, i.e., the creation and description of the separate conveyable real estate that constitutes a condominium unit. However, the statute also provides that the Act is not intended to modify local subdivision regulations. In practice, the tension between the Act’s comprehensive platting regime and local subdivision ordinances designed and appropriate for traditional non-condominium projects has created confusion across Texas.
Across Texas’s 254 counties, local authorities often treat condominium plats as subdivisions and apply traditional subdivision rules. In some cases, those rules make condominium development significantly more difficult—or effectively prevent it altogether. The proposed legislation would have clarified that state condominium law governs condominium platting and that local subdivision regulations should not be applied in ways that prohibit or materially interfere with condominium development. The goal was not to eliminate local oversight, but to create predictability and consistency statewide.
A Future Reform: Modernizing Condominium Insurance Requirements
Another issue that deserves attention—and one that relates directly to affordability—is the structure of condominium insurance.
In several states, including Texas, condominium statutes require the association to obtain property insurance not only for the structural and common elements but also for the units as originally constructed by the developer. That means the association’s insurance policy is required to cover drywall, interior finishes, cabinetry, flooring, and other components that functionally and legally belong to the unit owner. Association insurance costs flow through the association budget and are passed directly to owners through assessments.
In today’s insurance environment—where premiums have increased significantly in many markets—requiring the association to insure the original finish-out of an owner’s unit can materially increase the monthly cost of condominium ownership. A more flexible approach would allow associations to focus their insurance coverage on structural and shared components while requiring individual owners to obtain insurance covering the interior of their units as originally constructed. Safeguards could include minimum insurance standards for unit owners, proof‑of‑coverage requirements provided to the association, and coverage sufficient to restore a unit to habitable condition following a casualty event.
Several states already follow variations of this structure, and it has the potential to reduce association insurance costs in Texas while still protecting owners and lenders.
Continuing the Effort
To support these reforms, we formed Condos for Texas, an organization dedicated to advocating for policies that allow condominium housing to be built and financed in Texas. The policy objective is straightforward: If Texas wants to preserve a true ladder of homeownership, condominiums must remain part of the housing mix—not only in urban environments but also in suburban markets where they provide critical price‑point diversity.
Texas has already taken an important step with the 2015 condominium litigation reforms. The next steps—improving capital formation, clarifying regulatory authority, and modernizing insurance structures—are achievable and would further strengthen the condominium market. If Texas pursues these reforms, it has an opportunity not only to expand housing opportunities within the state but also to serve as a model for restoring condominiums as an achievable pathway to homeownership.
CONTACT:
Bob Burton I 512.370.2869 I rburton@winstead.com
Bob Burton is a Shareholder and Department Head at Winstead, where he leads the firm’s Real Estate Development, Real Estate Finance, and Public Finance practice areas. He has significant experience advising clients on mixed-use developments, master-planned communities, and complex community governance structures. Bob counsels national homebuilders and real estate developers on all aspects of residential, commercial, and mixed-use projects, including land acquisition, entitlement, project structuring, marketing, and regulatory compliance. His work spans large-scale master-planned communities, urban and suburban mixed-use developments, resort and second-home communities, and multifaceted condominium projects across the country.
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