FROM New York to Miami, from South Padre Island, Tex., to Park City, Utah, the American condominium has become the hot new investment for global capital. In Manhattan, the trend is so pronounced that a whole new category of real estate has emerged around the southern edges of Central Park: supertall, ultraluxury buildings, with more than half of the homes being sold to anonymous buyers (some perhaps looking to stash ill-gotten gains) who rarely, if ever, occupy them. The city, meanwhile, struggles to produce sufficient housing for those who do live here.

As policy makers nationwide consider the consequences of this trend, they should keep in mind that it is a result not just of global market forces (and international crime), but also of deliberate local choices, especially about the operation and regulation of condominiums.

The condominium, America’s most common form of multifamily homeownership, was not always king. Ownership of individual apartments first appeared in the United States mainly in the form of co-ops (and other, long forgotten, legal arrangements). As surprising as it may seem today, such ownership began as a way to curb real estate excesses. In the 19th century, the market for apartments, which were all rentals, was turbulent and often predatory. A builder might spend lavishly on a building lobby to lure tenants, but cut corners upstairs. Read more: