Co-ops Make a Comeback as Affordable Condo Options Dwindle

Co-ops were largely overlooked in recent years in favor of newer condos with splashy amenities — and none of the lifestyle constraints or intrusive financial vetting that co-op boards are known for. But with few affordable condo options to choose from, New Yorkers who had initially written off co-ops are taking the leap, finding appealing apartments and sellers who are primed to negotiate on price, Crain's reports. Co-op boards, too, are helping get deals done in some cases by relaxing certain financial requirements.

Entry-level buyers, many fed up with paying near-record apartment rents, have driven co-op transactions in recent months as mortgage rates fell from a peak reached this past May.

“People are tired of renting and are trying to get in before there’s more competition and they won’t be able to make a deal,” says Cindy Rachlin at Douglas Elliman Real Estate. “The people who are coming to me don’t want to be on the sidelines anymore.”

The numbers back her up. Contracts to buy Manhattan co-ops priced from $500,000 to just under $1 million soared 43% in September from the same month a year earlier, according to a report by Douglas Elliman and appraiser Miller Samuel. Brooklyn co-op contracts in that range, as well as below $500,000, more than doubled.

To get deals over the finish line, some boards are showing flexibility on certain rules, including the size of down payments and the buyer's cash reserves. Some boards will now approve buyers who need down payment help from their families, or even allow parents to co-purchase apartments with the adult kids who’ll occupy them, according to Rachlin. Other properties are endorsing deals with a larger share of financing or loosening the debt-to-income limit — say, to 30% from 25%.

“There’s a misconception that a board’s default is to say no,” says Taylor Durland, an agent at the Corcoran Group. While that may be true for Manhattan’s most exclusive buildings, Durland notes,, “for most well-funded co-ops, financing is less of an issue because they forecast for this. I think that gives them some confidence that they’re able to go a little bit above to help get their shareholders’ units sold.”

Even with the financial prerequisites and the hoops buyers have to jump through, co-ops are a traditional entry point to homeownership for many New Yorkers. That’s partly because they’re generally older and cheaper than condos, which got larger and more luxurious as developers courted an ever-wealthier clientele, according to Jonathan Miller, president of Miller Samuel.

The average price per square foot for Manhattan co-ops that sold in the third quarter was $1,183, compared with $2,046 for condos, data from Miller Samuel and Douglas Elliman show — meaning co-op buyers could get more space for less money.

“It’s a trade-off,” Miller says. “You either get amenities or affordability.”