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I'm really curious why co-op building companies provide cheaper housing compared to regular private companies. Public sector inefficiency is well studied. Co-o

I'm really curious why co-op building companies provide cheaper housing compared to regular private companies. Public sector inefficiency is well studied. Co-ops efficiency however not so much, at least for me.

woodpanel 9y ago
Disclaimer: I rented at two different co-ops in my life. My experience was great. Renters are „invested“ because they are: they buy shares, that spill dividends, they have a say as shareholders of private companies do. Attempt at answering: Co-ops try to provide affordable quality housing thus gains are usually reinvested via repair work and they don’t engage in selling their housing stock on the free market. Property they built, usually stays theirs forever. I think the biggest leverage on prices comes from land allocated to them by a city. As most shareholders are also renters they push the co-op leadership into keeping rents low and over time prices can diverge quite a lot from free market rates.
- cjalmeida 9y ago
  I see. But that also mean the original investors - the ones that put the initial money - are getting sub par returns. Or government land subsidies play an important role here assuming that private developers have no access to it. I don't see the lower returns as particularly damaging - there has been too much speculation in real state in recent decades. But that might not be the case once (if) returns get lower.
  - jmiserez 9y ago
    If the original investors are also living there (or bought in), then the cheaper housing costs make up for the lower returns, or no returns at all. The cheap housing is the return. Now technically you could argue that the outcome would be the same if you lived more expensively and you were an investor in some other for-profit housing with high returns. But that’s usually not the case, as the cash amounts you’d need initially are too high for most people.
    - woodpanel 9y ago
      Answering both of you guys: Being an original investor of a co-op usually meant you were really struggling with the alternatives. That is a return itself. There are also private housing stock examples for that behaviour: gentrification theory sees the so-called "pioneers" who move into low-quality neighbourhoods. They are doing much of the work improving quality-of-live/attractiveness that later on others will reap the benefits from like real-estate developers and long-time landlords.
  - woodpanel 9y ago
    Yes, land subsidies are a key engine. I'm aware of the moral problems that creates. But if I assume that within democracies a tendency persists to have some sort of social welfare, then I think it is more constructive to engage in how to organize this redistribution. Supporting co-ops seems like a very lean and non-harmful way (compared to government housing or state ordered quotas on free enterprises).

woodpanel 9y ago

Disclaimer: I rented at two different co-ops in my life. My experience was great. Renters are „invested“ because they are: they buy shares, that spill dividends, they have a say as shareholders of private companies do. Attempt at answering: Co-ops try to provide affordable quality housing thus gains are usually reinvested via repair work and they don’t engage in selling their housing stock on the free market. Property they built, usually stays theirs forever. I think the biggest leverage on prices comes from land allocated to them by a city. As most shareholders are also renters they push the co-op leadership into keeping rents low and over time prices can diverge quite a lot from free market rates.

cjalmeida 9y ago
I see. But that also mean the original investors - the ones that put the initial money - are getting sub par returns. Or government land subsidies play an important role here assuming that private developers have no access to it. I don't see the lower returns as particularly damaging - there has been too much speculation in real state in recent decades. But that might not be the case once (if) returns get lower.
- jmiserez 9y ago
  If the original investors are also living there (or bought in), then the cheaper housing costs make up for the lower returns, or no returns at all. The cheap housing is the return. Now technically you could argue that the outcome would be the same if you lived more expensively and you were an investor in some other for-profit housing with high returns. But that’s usually not the case, as the cash amounts you’d need initially are too high for most people.
  - woodpanel 9y ago
    Answering both of you guys: Being an original investor of a co-op usually meant you were really struggling with the alternatives. That is a return itself. There are also private housing stock examples for that behaviour: gentrification theory sees the so-called "pioneers" who move into low-quality neighbourhoods. They are doing much of the work improving quality-of-live/attractiveness that later on others will reap the benefits from like real-estate developers and long-time landlords.
- woodpanel 9y ago
  Yes, land subsidies are a key engine. I'm aware of the moral problems that creates. But if I assume that within democracies a tendency persists to have some sort of social welfare, then I think it is more constructive to engage in how to organize this redistribution. Supporting co-ops seems like a very lean and non-harmful way (compared to government housing or state ordered quotas on free enterprises).