What is co-op housing and how does it work?
Are you looking for a place to live? Are you ready to move into a new town? One of the things that many people don’t think about is the idea of co-op housing. Many of us have heard of this concept, but very few of us are familiar with it.
As with any personal finance decision, particularly your living situation, it’s important to understand your needs and preferences. Co-op housing works really well for some people, but it’s not right for everyone.
How does co-op housing work?
For some people, the concept of co-op housing is a little confusing. I know I didn’t really know much about it until I read about how it works in The Torontoist:
“While each co-op is owned by its membership, individual members do not own equity in their housing. If a member moves out, the vacated unit is available to another individual or family on the co-op’s waiting list.”
Co-op housing is an affordable option for low-income families. Many of these units have an income limit. The folks who live in these units have a say in the board of directors and can be highly involved with the community. The only caveat is that the residents aren’t homeowners. They’re active members of the community who have affordable housing.
The article goes on to explain:
“Each co-op is governed by a board of directors elected from the co-op membership at an annual general meeting. Each co-op has a set of bylaws that were ratified when the co-op was founded, and that are amended as necessary by the membership.”
There’s a heavy emphasis on community involvement when living in one of these properties. In fact, if you want to make the most of co-op housing, you need to make it a point to be involved.
I also learned that this type of housing is often funded through programs of different levels (federal, provincial, and municipal). This is why housing is so affordable for the families. It’s a good way to get your feet wet if you want affordable housing, but may not be able to buy your own place.
Co-op housing can be ideal for those who live in high-cost areas and want to be near their workplaces, but who might be priced out of the housing market.
What’s the difference between co-op housing and buying a condo?
When you buy a condo, you own your unit and you have a stake in the condo corporation. You don’t own a co-op condo. Buying a condo is a heavy investment that requires you to put down thousands of dollars. You also have to apply for a mortgage and pay more for insurance premiums. A co-op housing unit is for those struggling to find affordable housing in their communities.
Every housing decision comes down to your income and your flexibility. If you’re happy with your job and plan on staying around for many more years, you’re likely going to want to settle down with your own place. If you’re not where you want to be financially, you may want to look at co-op housing in order to find affordable housing closer to your work.