Co-op Housing: How it compares to Home and Condo Ownership

Co-ops_ An alternative to buying homes and condos(1)

With many first-time homebuyers finding themselves priced out of the market for home or condo ownership, some people might want to consider looking into a third alternative to renting: buying into a co-op housing – also known as a co-operative housing project.

Here are some key things to know about co-ops.

The difference between condos and co-ops

Condos and co-ops are both multi-unit residences – usually townhouses or mid-size highrises – and both are run by an elected board of directors. The key difference between condos and co-ops is how the ownership is structured.

With a condo, you own your individual unit – paid for outright, or with a conventional mortgage – while the rest of the complex, from the lobby and parking garage to the gym, rooftop patio and any other amenities are common elements that are shared.

With a co-op, you buy a share in the corporation that owns the property, and get exclusive use of the unit you’ll call home. According to the Co-operative Housing Federation of B.C., shares typically range from $1,000 to $7,000, with $2,000 being the average share price in that province.

Co-op members also pay a monthly “housing charge” which is very similar to rent. The Cole Road Co-operative Community in Guelph, Ont., is an 82-unit townhouse complex with a community centre and playground that first opened in 1991. Monthly fees on a two-bedroom unit are $856, and it’s $956 for a three-bedroom unit. Those fees do not include utilities such as hydro, gas, TV and telephone services.

Another key difference is that with co-ops, you forgo bidding wars in exchange for an application process. Most co-ops stress diversity in the makeup of their residents and will strive to further expand upon that. Others may be focused on a particular niche community, such as visual and performing artists.

On the downside, even if your application is successful, it can take months or even years before a unit becomes available.

Related read: Are timeshares worth it?

A focus on community living

For many co-op members, the concept is as much about social change and community investment as it as about owning the place where they live. According to the Ontario Co-operative Association, co-ops are “community-based organizations that care not only about the bottom lines of their business, but about the needs of their members and the quality of life in their communities. This doesn’t mean that co-operatives don’t turn a profit. They do and they need to in order to grow and provide their services to the members, but this isn’t the primary reason for their existence.”

That’s why most housing co-ops include a certain percentage of subsidized units where residents pay a discounted rate for their monthly housing charges, typically about 30 per cent less than the standard rate.

Unlike a for-profit business that issues shares, co-ops are run on the democratic principle of “one member, one vote” for key decisions, such as electing the board of directors or approving the annual budget. Members are also usually required to volunteer some of their time, serving on the co-op board or taking care of ongoing property maintenance.

There are a number of other industries that thrive on the co-op experience, including farming, childcare centres and financial institutions such as credit unions. The latter is important because – given that co-op buyers don’t actually own the unit they live in – conventional mortgages are hard to come by. Co-op residents will typically use a credit union to secure a loan with their ownership share as the collateral.

Would you choose to buy into a co-op? Share your thoughts with us in the comments below!

Related Topics

Buying A Home / First Time Home Buyers / Home Ownership / Lifestyle / Personal Finance / RSM News

6 thoughts on “Co-op Housing: How it compares to Home and Condo Ownership

  1. In your article about co-ops, you are talking about both equity co-ops and non-profit government subsidized co-ops where the residents do not own shares but just pay rent. You should make that clear. Windmill is a non-profit government subsidized co-op.

  2. “With a co-op, you buy a share in the corporation that owns the property, and get exclusive use of the unit you’ll call home. According to the Co-operative Housing Federation of B.C., shares typically range from $1,000 to $7,000, with $2,000 being the average share price in that province.” ” given that co-op buyers don’t actually own the unit they live in – conventional mortgages are hard to come by” WHY would you need a mortgage if you only buy a share and then essentially pay rent? You don’t really own the unit, just rights to use it?

  3. One not so good thing is that there are no banks that want to give you a mortgage when you want to buy a co-op unit. Until now in Ontario, only Duca credit union gives a mortgage for that and they add 1% to their rates because it’s a co-op unit.

  4. I believe CO_OPS are essential, now. Their should be more of them as I am one person that is unable the come up with a down payment to buy into the housing market. Soon I will be applying to Co-ops near buy. I believe their is a goverment program to help those who have a hard time with the Co-op shares.

  5. I lived in one and served on the board. In theory it’s great but STRONG personalities really can ruin the experience. The members who have been there the longest tend to want to own the place and push new members out. I would love to find a place where people keep the common goals in mind.

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