BLOG | Co-op and Condo Corner: Why Co-ops Matter – A Review of the Important Reasons
By Jane Curtis, Chair, Cooperative and Condominium Advisory Council (CCAC) of the Building and Realty Institute (BRI)
(ARMONK) Co-ops have been a part of New York’s housing mix for over a century, historically coming to the fore in times of crisis and opportunity.
In the 1920’s, labor unions sponsored co-op developments to fill the need for worker housing. Mitchell-Lamas flourished in the 1950’s post-war housing boom to close the gap between income and the cost of market rate housing. Rental buildings bankrupted or abandoned during the 1970’s New York City fiscal collapse were converted into financially stable market rate co-ops. Today, co-ops are enjoying a resurgence in popularity and government support as one important answer to our housing shortage.
Co-ops have survived and thrived because of their unique characteristics as a form of homeownership. Unlike condo owners, co-op shareholders are legally bound together in a corporate structure of joint ownership of their entire property. This mutual dependence creates both responsibilities and opportunities. While many choose co-op living to free themselves of the usual homeowner’s burden of repairs and snow shoveling, they nevertheless have a responsibility to participate in governance.
Cooperators cast their lot with each other to jointly manage both the financial and operational affairs of the building as a nonprofit business. Success arises when shareholders can meet their individual financial obligations to pay their share of the operating costs, be good neighbors by abiding by the house rules, and choose their Boards of Directors wisely.
Co-op boards are much like municipal governments, charged with providing the best possible service at the lowest possible cost. Co-ops do not seek profit, but operational efficiency that minimizes monthly maintenance costs to shareholder owners. Studies have shown that cooperators pay less than tenants in comparable rental buildings.
Co-op boards that fairly apply reasonable rules and actively foster community also reap the rewards of cohesion, common purpose, and neighborly consideration among shareholder residents, a possibility of community that is typically not present in other multifamily developments.
In short, co-ops can be both economical and pleasant places to live.
Co-ops on average are significantly more affordable than either single family houses or condominiums. In the current environment of dramatically escalating housing prices, co-ops have become especially attractive. The 2022 median cost for a single-family home was $885,000, $450,000 for a condo, and $203,000 for a co-op.
The affordability of co-ops is enhanced by historically favorable tax treatment, recently threatened by proposed state legislation that would dramatically increase property taxes and price many cooperators out of their homes.
Co-ops provide a first rung on the homeownership ladder for young adults, a refuge for the widowed and divorced, and a downsizing option for retirees. Limited equity co-ops provide an even more attainable goal for those who could not otherwise aspire to homeownership, and help to close the racial disparity in building generational wealth.
So, while many have attempted to characterize co-ops as exclusionary and elitist, the facts reveal that co-ops are empowering and progressive, places where it is possible to build both financial and social capital.
Co-ops need and deserve the support of everyone in the housing industry, to push back on the very real legislative threats to our financial and operational integrity. We ask all to support the BRI’s 2023 five-point legislative agenda with regard to co-ops. The agenda can soon be found at buildersinstitute.org.
Our goal: “Keep non-profit housing cooperatives and condominiums affordable for first-time homeowners, downsizing seniors and others by avoiding layering on additional costs.”
Editor’s Note: The Cooperative and Condominium Advisory Council (CCAC) represents more than 400 co-ops and condos. The organization, a component association of the Building and Realty Institute (BRI), was formed in 1979.
This article was featured in the Feb/Mar ’23 issue of IMPACT. View it here.