Co-op vs. condo discount

You're leaving out the square footage difference. Co-ops are generally measure as interior space (to the middle of the wall, which is one reason why square footage seems overstated). Condos are interior space plus the unit's share of common space: lobbies, elevators, hallways etc.

So if you did have a theoretical 900 sf co-op and a 900 sf condo that were the same price, the condo would actually be more expensive per square foot -- if we're talking about square footage where you can put your couch.

ali r.
{downtown broker}

I have no data to back this up, but I would be pretty surprised if coop rule-making did not still reduce their value somewhat.
Coops have so much flexibility to make weird rules, you are basically putting your rights at the mercy of a bunch of people that you don't know. For people that already live there and are comfortable with the way things work, that may be a good thing. But for someone who is coming from the outside, it is a big risk.

I think there is still a premium for condos because it isTYPICALLY easier to rent condos than co-ops, so foreign buyers or non-primary residents or temporary residents (parents buying for kids, second homes) tend to prefer condos, which broadens the pool of buyers for condos. More buyers = more demand = higher prices.

https://urbandigs.com/chart.php?type=medsaleprice+60MA&nbhoods%5B%5D=all&proptype%5B%5D=CONDO&proptype%5B%5D=COOP&price=all&slevel=all

Need to be lite user as median sale price chart is a subscription tool. I'll have my new blog up in 1-2 weeks and will start writing about these kinds of market trends again - now I got a whole suite of tools to write about!

Cheers all.

When I was apartment hunting 2 years ago, I found coops were about 75K to 100K cheaper than condos for a 1 bedroom/1 bathroom on the Upper East Side with comparable amenities and views. The condos were listed at 50 - 75 square feet smaller, but felt much, much smaller than that due to the layouts and possibly the measuring rubric. The coop and condo rules were similar except for the mortgage and refinancing.

A coop Board requires an Aztech agreement giving them first shot if you default on the "mortgage". You're really putting your shares of stock up for collateral to get the loan.

By the way, I did live in a condo that was able to get a mortgage on the super's apartment.

Damn, link broke.

Condo median almost 2x coop median. Now the spread is what we should monitor. Also median highly exposed to swings due to what types of apts close and when. But not sure what other metric we can use to answer op question. Chart room link here with 12 diff chart types to use -

https://urbandigs.com/charts.php#

Ps - hmm I'll add beds filter to this chart and see how that looks. Take a few days to build n regenerate stats. I'll post here when done.

Maklo: I would add a few points to the discussion.

1. Age: Some coops will have more wear and tear; this is dependent on each apartment. Some co-ops will be more run down than new condos, but white brick condos haven't aged well either. Regardless there is more pre-war coop stock and so it's easier to find better layouts, higher ceilings, better locations, and more gracious details in the units. Some people prefer these features of pre-war buildings.

2. Underlying mortgages: Dependant on co-op, but relevant as comparison between any two buildings. There are also tax benefits to the mortgages.

3. Stricter rules: Again, some people value the fact that co-ops are more exclusive and have more rules. If you are happy to abide by rules and be a good neighbor, then co-ops may work for you. If you'd like more flexibility to sublet, host guests, play music, pied-a-terre, etc. than condos may be a better option. I don't think that AirBnB is getting much traction in co-ops, for this reason.

Ultimately, there's a discount because so few people can get into co-ops, so resale is harder. If resale is harder, it's easier for buyers to negotiate. The same is not true in condos where anyone with a check-book can make a purchase as long as the bank approves a mortgage.

Agree with all of the above points. The only thing I would add is that comparing condo and coop prices is not an apples-to-apples comparison. Newer ultra-luxury buildings tend to be condos, whereas there are many older walkup buildings that are coops. So a simple comparison of the price per square foot will show condos to be much more expensive. Though most of that price difference is due to the difference in building type (has nothing to do with whether it is a condo or a coop).

Factors such as buildings rules and mortgage, which are fundamental to whether it is a coop vs a condo, should account for part of the price difference too, but it will be a must smaller amount.

The fact that one can rent their apt. If it is a condo is a big deal. If the economy should cool, one can always rent , not so in a co-op.

Thanks for all the comments. So I guess if we take co-op vs. condo quality out of the equation, what should be the discount due solely to co-op restrictions. Said a different way, if a co-op and condo had the same exact everything (real size, common charges, property taxes, fixtures, quality), except for the co-op restrictions, what should be the price difference (on average)? I personally don't think it should be more than 5% and even that's generous ... on a $3,000,000 apartment, is it really worth more than say $150,000 to have a little bit more flexibility in renting out?

as many posters have mentioned, there are many variables that can affect how the open market values a coop vs a condo. Especially for investors. And the new dev argument makes alot of sense as well. I would say the gap/spread, whatever you want to call, is way more than 5% if all else were equal. We will never be able to quantify this anyway, all just conjecture. But the trend of the spread is what would tel us what the original OP is looking for I think. Not sure the data really supports that. Spreads narrowed in 2009/2010, when the credit crisis rippled its way into the sales data at a lag. Conclusion there being condos prices fell more than coops in times of high volatility imo.

In times of crises/high vol/fear, investors go to cash and are less willing to invest, thus demand for condo drops more than demand for co-ops, tightening the spread. In the real estate bull market right now, with all these foreign investors (to whom money seems to be of no object), the spread is prob the widest we've ever seen - and definitely way more than 5% all else equal. Though the high dollar will prob curtail foreign investment activity in the foreseeable future and we'll see the spread tighten back to more normal levels

I have to agree with front_porch on the coop vs condo size difference. I went to see a condo apt advertized as 700sq ft. The realtor included the terrace, exterior hallway section in front on the apt door ( clearly common space), storage lockers, laundry room , lobby.

I think sometimes they are trying to sell to foreign buyers. The place was probably 350sq ft if that. The floor plan looked spacious, but the agent was clearly trying to trick someone into thinking they were getting a good deal.

Seems like a trick they use in new developments - that's why you have to look at the floor plan as well. From my experience condos built in the 70s and 80s seem to be more honest about square footage

Condo square footage is listed in the offering plan. Brokers shouldn't be giving estimated square footage for condos. You are not buying square footage in a co-op you are buying shares in a corporation. Square footage is not listed in the offering plan of a co-op since you are not purchasing sq ft. Condos will always sell for more as investors generally cannot by co-ops.