CO-OPS: UNIQUE FORMS OF HOUSING
More than 5 million American households live in condominiums (condos) or co-operatives (co-ops), which are unusual forms of occupancy compared with fee-simple owner occupancy or renter occupancy. Generally, condos and co-ops are owner-occupied units in multifamily structures in which the owners hold the entire property or the common components of the property in a form of joint ownership. Management decisionmaking takes the form of participatory democracy. Complex master deeds, covenants, and bylaws specify the rights and obligations of the co-owners.
Half of the 5 million existing condo or co-op units were built within the past 30 years. Not all condos and co-ops are owner occupied; approximately one-quarter of them are rented. Although most are located in the South, the West and Northeast have proportionately more condos and co-ops. Condos and co-ops tend to be located in the suburbs of metropolitan areas, and very few are in rural areas. In addition they are concentrated in a limited number of metropolitan areas.
Townhouses and large multifamily units in highrise buildings account for nearly half of all condos and co-ops. Condos and co-ops tend to be newer and larger than rental units and are nearly as free of physical problems as owner-occupied units1 and better than rental units. Occupants of condos and coops rate their units and neighborhoods almost as highly as do owners and higher than do renters.
Nonfamily households comprise approximately half of condo and co-op households, a higher proportion than for renter households and considerably higher than owner-occupied households, which are dominated by husband-wife families. Condo and co-op residents are more likely than owners but less likely than renters to be minorities. Condo and co-op households have fewer people per household than rental households and considerably fewer than owner households. Their incomes are above renter households incomes but below owners incomes. Condo and co-op households out-of-pocket housing costs or expenditures are nearly equal to owners but approximately 20 percent higher than renters.
Condos and co-ops represent an important source of new multifamily housing units, although construction has slowed in recent years. The Survey of Market Absorption,2 which collects data on multifamily housing units completed, has provided estimates of the number of condos and co-ops built since 1970. Exhibit 1 presents data on the number of all multifamily completions, the number of all condo and co-op completions, and the percentage of multifamily completions that are condos or co-ops. Of the total of 12 million multifamily completions from 1970 to 2002, approximately 2.3 million were condos and co-ops. This represents an average of approximately 71,000 units per year or 1 in 5 units. There was considerable variation during this period in the number and share of condo and co-op units completed: the fewest was 31,100 in 1992, and the most was 159,000 in 1974. The largest percentage, 37 percent of multifamily completions, was produced in 1982, and 1971 and 1972 saw the lowest percentage, 8 percent. From 1970 to 1990 the annual production of condos and co-ops ranged from approximately 43,000 to 160,000 per year, with a pattern of variation that reflected that for all multifamily completions. Since 1990 there has been a reduction in the number of condos and coops completed, with a fairly constant rate of approximately 35,000 per year.Stock, Location, and Distribution
In 2001 there were approximately 5.3 million condos and co-ops, accounting for 5 percent of all occupied housing units, according to the American Housing Survey (AHS)3 (exhibit 2). Of these, 1.5 million (28.5 percent) were renter occupied and 3.8 million (71.5 percent) were owner occupied.4
Proportionately, the largest number of housing units is located in the South (35.8 percent). The South also has the most condos and co-ops. However, the percentage is less compared with total housing units (30.1 percent) (exhibit 3). Condos and co-ops are also underrepresented in the Midwest, with 23.3 percent of all housing units but only 17.6 percent of all condos and co-ops. The West and the Northeast have higher shares of condos and co-ops (28.1 and 24.3 percent, respectively) than their shares of all housing units (21.7 and 19.2 percent, respectively).
Condos and co-ops are mostly located in metropolitan areas, particularly in the suburbs, sharing this location propensity with owner-occupied units. As shown in exhibit 3, 61.2 percent of all condos and co-ops are located in metropolitan areas outside of central cities compared with 59.6 percent of owner-occupied units and 46.9 percent of renter-occupied units. More than 36 percent of condos and co-ops are in the central cities of metropolitan areas, less than renter-occupied units (45.2 percent), but both are more prevalent in central cities than owner-occupied units (21.9 percent). Few condos and co-ops (2.3 percent) are located outside metropolitan areas compared with 18.5 percent of owner-occupied units and 7.9 percent of renter-occupied units.
More than half of all condos and co-ops are located in 21 U.S. metropolitan areas, as shown in exhibit 4. These include the largest metropolitan areas and those located in the Sun Belt, which appeal to retirees. The New York metropolitan area has the highest concentration with 480,416 condos and coops, representing 9 percent of all of this type of housing in the United States. The Los Angeles-Long Beach area has the second highest concentration with 251,282 condos and co-ops or 4.7 percent of the U.S. total. Other metropolitan areas with significant numbers of condos and co-ops include Chicago with 212,632 or 4 percent of the total; Miami-Hialeah with 155,301 or 2.9 percent of the total; Washington, DC, with 150,765 or 2.8 percent of the total; Fort Lauderdale-Hollywood, with 136,333 or 2.6 percent of the total; Detroit, with 120,604 or 2.3 percent; and San Diego, with 113,723 or 2.1 percent. Condos and co-ops account for a significant proportion (728 percent) of all housing in each of these areas. In three areas approximately one in four housing units are condos or co-ops: West Palm Beach-Boca Raton with 28.4 percent; Honolulu with 24.6 percent; and Fort Lauderdale-Hollywood, FL with 24.3 percent.
Buildings and Structures
We can also examine the distribution of housing units by structural characteristics. Exhibit 5 shows distribution by structure type, number of stories, year built, number of rooms, number of bedrooms, and number of bathrooms.
Condos and co-ops are most often single-family attached housing units. As shown in exhibit 5, approximately 30.4 percent of all condos and co-ops fall into this category compared with 10.1 percent of renter-occupied units and 3.6 percent of owner-occupied units. The second most common type of structures for condos and co-ops are large multifamily structures, where condos and co-ops comprise from 10.7 to 16 percent of the total units depending on the size of the structure. Condos and co-ops in multifamily buildings are more likely, 27 percent, to be in buildings of 20 or more units compared with renter-occupied units, 16.8 percent. More than 62.2 percent of all condos and co-ops are found in one type of multifamily structure or anothernearly equal to the percent of renter-occupied units. They are less frequently single-family detached housing units compared with other types of housing units: 6.7 percent compared with 24 percent of all renter-occupied units and 86.1 percent of all owner-occupied units. Few condos and co-ops are manufactured homes, at 0.8 percent, compared with renter-occupied units, at 3.8 percent, or owner-occupied units, at 8.7 percent.
Condos and co-ops are generally newer than other housing units because condo ownership in the United States is a fairly recent development. Overall 36.7 percent of the occupied housing stock was built before 1960, but only 13.3 percent of condos and co-ops are this old. The percentage of condos and co-ops built in 1980 or later is 45.7 percent, whereas 31.3 percent of all occupied housing units are this new.
Condos and co-ops are typically in large highrise buildings. More than 15 percent of condos and coops are in buildings with six or more stories, whereas only 6.6 percent of renter-occupied units are in similar buildings.
Condos and co-ops are larger than rental units but considerably smaller than owner-occupied units as measured by the number of rooms per unit. Exhibit 5 shows that approximately 15 percent of condos and co-ops have three or fewer rooms, compared with approximately 27 percent of all rental units.
Only slightly more than 1 percent of owner-occupied units are this size. The reverse of this pattern is apparent when the larger units are examined. More than two-thirds of owner-occupied units have six or more rooms compared with almost 22 percent of condos and co-ops and slightly more than 16 percent of rental units.
The distribution of units by number of bedrooms also shows that condos and co-ops are larger than rental units but considerably smaller than owner-occupied units. Nearly a third of rental units have one or no bedrooms compared with a fifth of condos and co-ops and fewer than 1 in 50 owner-occupied units. Nearly 80 percent of owner-occupied units have three or more bedrooms, whereas only approximately 24 percent of condos and co-ops and slightly more than 25 percent of rental units are this large.
Condos and co-ops have approximately the same number of bathrooms as owner-occupied units, and they both have considerably more bathrooms than rental units. More than 50 percent of condos and coops and almost 56 percent of owner-occupied units have two or more bathrooms compared with only 18.3 percent of rental units. Almost 71 percent of rental units have only one bathroom, whereas only 32.1 percent of condos and co-ops and 25.5 percent of owner-occupied units have only one bathroom.Perceptions of U.S. Housing and Neighborhood Conditions
Inadequacy of housing units is defined by various problems with heating, plumbing, electricity, water, rodents, walls, floors, and ceilings.5 The majority of housing units in the United States is adequate, approximately 94 percent, as shown in exhibit 6. Rental units have the highest incidence of severe inadequacy at 3.5 percent, but only 1.3 percent of owner-occupied units and 2.0 percent of co-ops and condos are severely inadequate. Even the incidence of moderate inadequacy is low, with only approximately 4 percent of all U.S. housing units meeting these criteria. The incidence is 7.5 percent for rentals, 4.0 percent for condos and co-ops, and 2.8 percent for owner-occupied units.
U.S. households have fairly high opinions of their housing units, as shown in exhibit 6. On a scale of 1 to 10 with 10 being most favorable, more than 70 percent of households rated their units an 8 or better.
Renters were less positive than condo and co-op residents and owners. Only 56.3 percent of renters assigned a rating of 8 or better compared with approximately 75 percent for condo and co-op residents and owners. Renters also were more likely, 6.0 percent, to rate their buildings a 4 or below compared with 2.0 percent for condo and co-op residents and 1.4 percent for owners.
Households are about as generous when rating their neighborhoods as they are when rating their units. On the same 1-to-10 scale, approximately 70 percent of U.S. households rated their neighborhoods an 8 or better. Similar to the housing unit ratings, renters gave the lowest proportion of 8-or-better ratings for their neighborhoods, 57.4 percent. Approximately 74 percent of owners rated their neighborhoods an 8 or better, as did almost 71 percent of condo and co-op occupants.
Family and Household Demographics
Owner-occupied housing is clearly the preferred choice of families including a husband and wife, with this group encompassing 63.9 percent of owner-occupied units. In contrast husband-wife families occupied only 34.6 percent of condos and co-ops and 27.5 percent of rental units, as shown in exhibit 7. Female-headed families make up nearly 20 percent of renter households but fewer than 10 percent of condos and co-ops or owner-occupied households. Nonfamily households account for approximately 32 percent of all households but account for approximately 53 percent of condos and co-ops, 48 percent of rental units, and 23 percent of owner-occupied units.
The racial composition of condo and co-op households is similar to that of owner-occupied households. White householders occupy approximately 86 percent of owner-occupied units, 82 percent of condos and co-ops, and 67 percent of rental units, as shown in exhibit 7. Approximately 21 percent of renter households have Black householders, whereas less than 9 percent of both owner-occupied and condo and co-op households have Black householders. Of the 106 million households in the United States, approximately 9 percent have a Hispanic householder. Hispanic householders are more common in rental properties, where approximately 15 percent of households with Hispanic householders live compared with approximately 9 percent of condo and co-op households and 6.5 percent of owner-occupied households.
Condo and co-op households tend to have fewer people than renter households and considerably fewer people than owner-occupied households. More than 80 percent of condo and co-op households have one or two people, whereas 64.2 percent of rental households and 55 percent of owner-occupied households are that size. Specifically, 44.6 percent of condos and co-ops are individuals living alone. Larger households are more common in owner-occupied units, with 28 percent having four or more people, compared with 20.3 percent of rental units and 10 percent of condos and co-ops.
Condos and co-ops and owner-occupied units have older householders than rental units. Some 58.6 percent of condos and co-ops and 63.0 percent of owner-occupied units have householders ages 45 and older, whereas only 34.9 percent of rental units house people within that age group. Looking at households with people ages 65 and older reveals that condos and co-ops cater to this population, as 27.9 percent of condos and co-ops have householders in that age group. Householders younger than 45 occupy 65.1 percent of rental units, whereas condos and co-ops have 41.4 percent and owner-occupied units have 37.0 percent in that age group.
Household incomes for condos and co-ops are approximately 50 percent higher than rental units and approximately 20 percent lower than owner-occupied units, as shown in exhibit 7. Approximately 42 percent of condo and co-op households have incomes of $50,000 or more. Only 20.7 percent of rental households have incomes in that range, but more than 50 percent of owners have incomes in this range. Median incomes also follow this pattern: condo and co-op households have median incomes of approximately $42,000, renter households approximately $27,000, and owners $51,000.
Housing Costs and Burdens
Monthly housing costs6 are highest for condo and coop households, with owner-occupied units nearly as expensive and rental units approximately 20 percent less. Exhibit 8 shows that monthly housing costs are $800 or more for almost 46 percent of both condo and co-op units and owner-occupied units, whereas only 26.5 percent of renter households had monthly housing costs this high. Only 28.8 percent of condos and co-ops had monthly housing costs under $500, whereas 35.1 percent of renters and 35.9 percent of owners had monthly housing costs this low. Some of the difference in owners and renters monthly housing costs is attributable to the cash flow basis for measuring costs. As a result owners with paid-off or low mortgages have zero or low payments for principle and interest, and younger householders such as owners of condos and co-ops carry larger mortgages with high monthly cash flow requirements for principal and interest. A second reason condo and co-op households have high monthly costs is that they are concentrated in some of the largest metropolitan areas, which are likely to be high-cost areas. Median monthly housing costs are approximately $750 for condos and co-ops, $605 for renters, and $725 for owners.
The degree to which monthly housing costs are a burden is measured by the ratio of monthly housing costs to monthly incomes. A general rule is that a family should spend approximately 1 weeks income on housing, meaning a burden ratio of 25 percent. In the United States only approximately 56 percent of households spend under 25 percent of their incomes for housing. The proportion of condo and co-op households spending under 25 percent is 52 percent; for renters, the proportion is 39 percent; and for owners, 65 percent. Conversely more than 22 percent of renters pay 50 percent or more of their income on housing. Condo and co-op households and owners less frequently spend more than 50 percent of their incomes on housing15.5 and 10.2 percent, respectively.
1. The phrase owner-occupied units in this article excludes condos and co-ops. Similarly, renters excludes renter-occupied condos and co-ops.
2. This sample survey is sponsored by the U.S. Department of Housing and Urban Development and has been conducted by the Census Bureau since 1970. Information about the survey can be found at http://www.census.gov/hhes/www/soma.html.
3. The AHS is sponsored by the U.S. Department of Housing and Urban Development and has been conducted by the Census Bureau since 1973. Information about the survey can be found at http://www.huduser.gov/datasets/ahs.html or http://www.census.gov/hhes/www/ahs.html. Because the AHS is a sample survey, all estimates presented in this article are subject to sampling and nonsampling errors.
4. The AHS asked respondents whether the unit was a condo or co-op, but those data are not available on the public-use file because of confidentiality. However the published AHS report shows that the total is composed of approximately 10 percent co-ops and 90 percent condos.
5. A unit is severely inadequate if any of the following conditions exist: 1) The unit lacks complete plumbing facilities. 2) Three or more heating equipment breakdowns lasting 6 hours or more in the past 90 days have occurred. 3) The unit has no electricity. 4) The electrical wiring is not concealed, working wall outlets are not present in every room, and fuses or breakers blew three or more times in the past 90 days. 5) Five or more of the following conditions exist: outside water leaks, inside water leaks, holes in the floor, cracks wider than a dime in the walls, areas of peeling paint or plaster larger than 8-1/2 inches by 11 inches, or rodents seen recently in the unit. 6) All of the following conditions exist: no working light fixtures or no light fixtures at all in public hallways; loose, broken, or missing steps in common stairways; stair railings are not firmly attached or are not present; and there are three or more floors between the unit and the main entrance to the building but there is no elevator. A unit is moderately inadequate if it is not severely inadequate and any of the following conditions exist: 1) The unit lacks complete kitchen facilities. 2) Three or more toilet breakdowns lasting 6 hours or more in the past 90 days have occurred. 3) An unvented room heater is the main heating equipment. 4) Three or four of the following exist: outside water leaks, inside water leaks, holes in the floor, cracks wider than a dime in the walls, areas of peeling paint or plaster larger than 8-1/2 inches by 11 inches, or rodents seen recently in the unit. 5) Three of the following exist: no working light fixtures or no light fixtures at all in public hallways; loose, broken, or missing steps in common stairways; stair railings not firmly attached or not present; there are three or more floors between the unit and the main entrance to the building but there is no elevator.
6. Monthly housing costs are the sum of utility costs, real estate taxes, cost of homeowner insurance, condominium/homeowners association fee, land/site rent, other mortgage charges, other required mortgage fees, mortgage payments, routine maintenance costs, and rent payments.
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