• Marc Pare

Why are coops cheaper than condos?

Updated: Sep 24



If you're reading this article, chances are you want to know the difference between condos and co-ops and explore the factors that make the later more expensive than the former. We know how exhausting home buying is, given the nuance between different properties. Housing options are scarce, and half the time, you'd be surprised to know something so simple is priced so ridiculously high. Home-buyers spend months trying to find the perfect home, and even then, they don't really like their options for one reason or another. Houses are grouped into different types, and the housing market is an abyss of its own - the more you explore, the wider and more confusing the options get. 


Read on to know the differences between condos and co-ops and explore the reasons cooperatives are cheaper than condominiums even though they both appear to be the same. 


What is a condo?

Short for condominiums, condos are private residences in a multi-unit building. Owning a condo gives you full ownership of the individual unit and joint ownership of the common facilities and property, such as the pool, gym, laundry room, parking lot, elevators, and stairways. Basically, anything within the structure of the building that is accessible to all residents, except for the individually owned units, is the common area and can be used by all. 


A building association generally takes care of the maintenance of these jointly owned facilities. Residents pay monthly fees to the association to take care of the common areas. The association uses the condo fees for the maintenance and development of the shared spaces. Remember the hit television show The Big Bang Theory? Yes, their apartment building is a good example of a condo - individually owned units with a shared space, including the infamously broken elevator and the laundry room.


Florida condo board certification course will help you take a deep dive into how condos work, in addition to qualifying you for membership of a condo association.


What is a co-op?

A co-op might seem quite similar to a condo on the face of it, but it's very different on paper. Short for housing cooperatives, co-ops are also multi-unit buildings. While condo units are individually owned, co-ops are jointly owned by all residents, which means that all co-op owners have an ownership in the entire building - not just the unit they're living in. A contract or lease allows the owners to occupy one unit, but they don't own it fully. 


Owners of co-op houses collectively own and maintain the building, and their ownership is in the form of shares in a non-profit corporation. The title to the property is held by the corporation, and permanent proprietorship, with the permission to use the common elements in the building, is granted to the residents as leases according to the Cooperative Ownership Law.


What makes a condo more expensive than a co-op?

If the only difference between co-ops and condos is that condos are ownership in real property, while housing co-ops are ownership of shares in a corporation, then what makes a condo out-do a co-op in terms of price? What sets a condo's per square foot price far higher than a housing coop? And what would buyers be better suited to buy, given their long-term plans and financial standing? Read on below. 


  1. Financing Policies: Policies vary from co-op to condo, and for buyers who are not paying in cash but are financing their purchase, these financing policies make all the difference in choosing a condo or a co-op. For housing coops, the policies are stringent - and when you think stringent, think very stringent. Some co-ops don't allow financing at all, whereas others demand a down payment of around 50%! Condominiums, on the other hand, usually only ask for 10-25% down payment, which makes them a much more attractive option for buyers, especially if financing policies are pricing co-ops the same - and sometimes even more - as condos.

  2. Board and Association Policies: A co-op board uses rigorous building policies, especially when it comes to pets and loud noises. This poses a problem for people who have furry friends or love to host parties. They would choose to move into a condo that has more lenient rules than a co-op. Some co-ops even have exclusive societies or "clubs," which only accept buyers who fulfill certain undisclosed criteria. For reasons such as these, co-ops pose quite a non-friendly atmosphere for most people's liking. After all, some people are mommies and daddies to fur babies, and they can't be left behind, now, can they?

  3. Investor Interest: Many people would like to invest in property because the ROI is higher compared to many other investments. Real estate value has almost always been seen to inflate, and it's a low-risk investment. Meanwhile, co-ops' rules, like the no-pet rule, also restrict owners from renting their property out, making it a non-positive cashflow investment. Not the most ideal scenario, right? Condos, on the other hand, have no such rules since one unit is entirely owned by one person and can be rented out. This makes a condo more expensive and a perfect investment for investors.

  4. New Development: Where there is demand, there will be supply. Recent property development has shown a steep increase in the number of condos being built with co-ops being sidelined. Turns out, buyers are more willing to pay a premium for a condo, with all the amenities. New condominium projects come with all the luxuries and almost none of the rules. 


When something is in high demand, simple economics dictates that its price will increase. And the above reasons clearly showcase what the buyer choice would be when it comes to choosing between a co-op and a condo. A condominium board certification course will help you get to the nitty-gritty of a condo, including the difference between a condo and a housing cooperative.

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