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Co-ops are better, and we can prove it

by admin on June 9, 2017

At a time when policymakers and housing advocates explore new approaches to affordable homeownership, it is useful to look back on the superior track record that co-ops have amassed over several decades, and to recognize the role of NAHC publications in bringing this research to light. Here are six key findings.

1.    Cooperative housing produces significantly higher quality of life for the resident as compared to affordable rental housing.

Mushrush, Larson, and Krause, Social Benefits of Affordable Housing Cooperatives, Center for Cooperatives, University of California at Davis, 1997

Saegert, Susan,“Survey of Residents of Currently and Previously City-Owned Buildings in the Bronx” in Housing in the Balance: Seeking a Comprehensive Policy for City-Owned Housing, Task Force on City-Owned Property, 1994

Saegert, Susan,“What We Have to Work With: The Lessons of the Task Force Surveys” in No More Housing of Last Resort: The Importance of Affordability and Resident Participation in In Rem Housing, Task Force on City-Owned Property, 1996

Altus and Mathews, “A Look at Satisfaction of Rural Seniors with Cooperative Housing,” Cooperative Housing Journal, 1997

2.    The higher level of participation in broadly-based, regularly functioning resident associations in low-income cooperatives, as compared to affordable rental housing, was effective in preventing in-building crime as demonstrated by crime statistics over a six-month period.

Saegart and Winkel, “Cooperative Housing, Social Capital and Crime Prevention,” Cooperative Housing Journal, 2001

3.    Limited equity cooperatives create social capital that powers social activism that preserves affordable housing an maintains diversity in a hot gentrifying urban market.

Saegert and Extein, “Limited Equity Cooperatives Reinforce Anti-gentrification Measures, Cooperative Housing Journal, 2003

4.    Cooperatives lowered monthly housing costs to residents by more than 20% compared to physically similar affordable rental housing managed by the same management companies.

Parliament, Vonnegut, and Parliament, “Keeping Housing Affordable: Cooperative vs. Absentee Ownership,” Cooperative Housing Journal, 1998

5.    Manufactured home owners experience appreciation in the value of their homes in a cooperatively owned park, and pay 7% lower monthly fees than residents in rental parks.

Ward, French, and Giraud, “Effect of Cooperative Ownership on Appreciation of Manufactured Housing,” Cooperative Housing Journal, 2005

6.    Limited equity co-ops do a better job of preserving affordability than the community land trusts and programs using deed restrictions.

Temkin, Theodos and Price, Balancing Affordability and Opportunity; An Evaluation of Affordable Homeownership with Long Term Affordability Controls, The Urban Institute, 2010

7.    Cooperatives are a lower risk to lenders and the government.

A.    In an analysis of defaults of FHA-insured multi-family loans in the 221(d)(3) and 236 mortgage subsidy programs between 1958 and 1993, cooperatives had a lower default rate than rental properties owned by both for-profit and non-profit entities.

Calhoun and Walker, Performance of HUD Subsidized Loans: Does Cooperative Ownership Matter, The Urban Institute, 1994

B.    The FHA Section 213 market rate co-op mortgage insurance program has returned unneeded and unused premiums to the co-op buildings in every year of its existence. Section 213 has the lowest default rate of any FHA multifamily or single family program.

C.    The National Co-op Bank reports that of its 4386 co-op building loans, none were in foreclosure as of June 30, 2011, and the delinquency rate is less than one hundredth of one percent.
NCB also services 7388 share loans for co-op members. The bulk of those are in New York City, where NCB has experienced no foreclosures. Below is a comparison of the status of NCB’s co-op portfolio and Fannie Mae’s and Freddie Mac’s conventional single family loans and multifamily rental loans as of June 30, 2011.


           Single family                 Multifamily rental
90 days+ deliquent     60 days+ deliquent

Fannie Mae                     4.08%                              0.46%
Freddie Mac                    3.50%                              0.31%

Share loans                     Co-op blanket mortgages
90+ days delinquent     60+ days deliquent
NCB co-op loans            1.88%                              0.008%

[courtesy of the National Association of Housing Cooperatives]

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