Flashback a decade. The year is 2006. Townhouse-Condo construction makes up 56.8% of new construction in the Twin Cities Metro.

Now fast forward to 2016 and townhouse-condo construction makes up a mere 14.5% of new construction in the market. Wow, what a difference a decade makes!

And now for the obvious question; why have we seen this decline? Simple answer, the liability is too great.

Builders, lenders and insurance companies are unwilling to support the construction of new townhome or condominium projects due to the great risk of being taken to court at the 11th hour for what would typically be considered normal wear-and-tear issues.

Single family and townhouses used to evenly divide the new construction market. Today, townhouse construction is at a 15 year low, only making up 14.5% of the market. Much of this is due to liability concerns from builders, lenders, and insurance companies. Source: Minneapolis Area Association of Realtors (MAAR) and RMLS of MN, Inc.

Single family and townhouses used to evenly divide the new construction market. Today, townhouse construction is at a 15 year low, only making up 14.5% of the market. Much of this is due to liability concerns from builders, lenders, and insurance companies.

Source: Minneapolis Area Association of Realtors (MAAR) and RMLS of MN, Inc.

The effect of this risk is a gradual divide between single family homes and townhouse-condo options in the market. Especially in the core cities and inner suburbs, townhouses and condos are considered a lower cost ownership opportunity for individuals and families who want to buy a home. Unfortunately, consumers (especially entry-level) are now being limited in their home-buying options.

During the 2016 Minnesota Legislative Session, legislation was introduced, but no attempt was made to have the bill heard. However, a strong coalition interested in promoting more ownership housing in the core cities and inner suburbs is committed to engaging in this issue again in 2017.