Why the Condo Market Is Hyper-Cyclical

On our latest podcast, Ben Rabidoux joins us to explain why the condo market is hyper-cyclical and how decisions made today don’t show up for years which throws everything off.

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I think in real estate in general, we’d be better off to talk that way about detached homes and not group them with condos and everything else. It gives a clearer picture of what’s actually happening out there.

You are so, right. So the problem with the condo market is, I always make the point that it’s hyper cyclical, right? So the, the problem with condos is that it’s, it’s a minimum five year construction timeline by the time you get started on a big development. And so the problem if you go back to, let’s say 2023, is we realized, oh geez, we have way too many of these, as Ron Butler would say, dog crate condos, right?

These too many small units. And we realized that in 2023, uh, unfortunately you’ve still got a tidal wave of supply that’s in the construction pipeline that’s coming. And so you’re, by the time you realize you’ve got too many, you’ve got two or three more years of a lot of supply. And, but the opposite’s also true.

By the time you realize you don’t have enough. You, you’ve got a shortage for four or five years, that’s gonna be the situation come kinda like 2029, 2030, where we’re gonna be dramatically undersupplied condos. But because of that cyclicality, the single family market’s much quicker to respond to the current economic situation.

Developers will pull back building single family homes very quickly and they have, and so you’ll start to see that market, I think tighten kind of in, in 2026.

And to your point, it’s not that deep. It’s because it takes so long to build a condo tower. And again, you’ve gotta have these lead times and that causes a lot of these difficulties.