Every so often, several deals occur over a short period of time that raise our eyebrows in terms of new, developing market trends. While we can’t call it an outright exodus, we have encountered one too many of these situations to not mention them: owners selling their coops and strongly opting for condos in their subsequent purchases. Some have chosen to do so based on the difficulties they’ve had with the board in their efforts to sell. Others have sought the subletting flexibility that comes with owning condos, while others still are attracted by the lower down-payments required for condo purchases.
From a more academic standpoint, these instances raise the question whether coops are on the decline in NYC. True, they provide significant advantages that protect their respective shareholders, as they have done during the downturn. Many would strongly argue that they are responsible for muting Manhattan’s decline over the last few years. Furthermore, co-ops make up a vast majority of the housing stock in the city (~65%), meaning it would take quite a long time for them to decrease in importance against our real estate landscape. Lastly, it’s undeniable that some of the most prestigious buildings in all of Manhattan are co-ops, protected and coveted for the very structure they impose.
Yet it will be interesting to see if their advantages will be increasingly seen as a liability for prospective purchasers as time goes on, if the spread between condos and co-ops widens to greater than the current 15% average, and if buyers begin to actively shun their “archaic” regulations for the freedom of the condo. Who knows: maybe boards will evolve towards shifting their mindsets and develop creative ways to refresh their standards and meet today’s buyer needs.
We would love to hear from all you buyers out there: are you looking at coops or condos, and why?