Out with Co-ops -- In With Condo's?
A: As I browse Curbed.com today I notice a frustrated reader bring up the question of 'Why Are Co-ops Here'? It's a great question as future first time homeowners don't really know the headaches and restrictions that many Co-ops place on their shareholders. From the tedious board approval process to subletting and living policies, you would think Co-ops are a dying breed. But I'm not so sure they are.
To Curbed Reader: As much as I would like to agree that a city of condo's would be so much simpler than a city ruled by Co-ops, I don't see much change down the road. Yes it is true than almost ALL new developments are either Condo or Condop, I do not see how the more liberal condo legal structure will ever surpass the restrictive and dictatorship model of Co-op legal structure in New York City.
Rather, I do see a future environment where existing Co-op boards get more liberal as the members of the board change over time and reflect the new ownership of the building itself. In my opinion, a Co-op board with less stringent policies makes for a more valuable stock certificate at resale.
A Co-op with more liberal purchasing, subletting, living, and reselling policies can be marketed to a larger pool of potential buyers making it more valuable. A Co-op property with very stringent board policies must lower their asking price as they are marketing to a much smaller buyer pool.I'm sure many filthy rich people out there will disagree with me as they prefer the stringent policies of their Co-op boards so as to maintain the quality of resident that ultimately makes it as a shareholder of their private corporation. But there are more less wealthy people out there than filthy rich people. So, I tend to side with the masses.
New York City used to be about 80% Co-op or so (estimate only) and has since started swaying a bit towards the Condo side with all the development due to the past 3-4 years of the housing boom. Now I would say NYC is about 75% Co-op. This # will never go below 50% so a world not ruled by Co-ops in New York City is just an unrealistic dream. Instead, look for a LIBERALIZATION of Co-op boards that will be an attempt to level the playing field when it comes to board approval, subletting, pied-e-terres, parents buying for kids, and reselling; all features of a Condo that make it more valuable.
But in the end, you still own stock in a corporation. Never forget that! Closing costs will always be lower and Co-op owners will never own a title to their property!
~ Ask Curbed: Will the Revolution Be Condo-ized?
