One of the interesting oddities to surface in the last few years in the real estate market is the high surge in popularity for co-op apartments.
Between Baby Boomers looking to stay in the area but downsizing from larger homes and young couples looking to purchase a co-op as a starter home as opposed to renting right after marriage, the demand for co-ops in our area has skyrocketed.
Prices, although higher than in years past, are still much lower than for smaller starter homes, and have set off an interesting market phenomenon of parents buying apartments for their newly-married children at bargain basement prices, creating a win-win situation for all parties concerned.
The parents win by purchasing an investment property which is lower in price than the amount they would have spent buying a starter home for their kids. The kids win by living in their own property instead of renting, which allows them to build equity. And the sellers win by securing buyers who are not only willing to buy their co-op at a fair price, but have the financial capacity to pass the co-op board’s approval.
This is not to say that parents are the only ones taking advantage of this desirable co-op market. There are many other buyers, both young and old, who are taking advantage of the current attractive coop market, but having a third-party older buyer as the actual buyer has added a huge new pool of investors to this sector of the real estate market.
A co-op by definition is just that, a co-operative arrangement. Like a kibbutz, no one has actual ownership of property, but is one of many shareholders in a corporation which owns the development and its lands and buildings.
It is not the same as buying a house, in which a buyer owns the house and the property on which it sits, but rather the co-op owner has a dedicated space in a co-operative development, which translates into shares of a corporation rather than land ownership. These shares are predefined to go together with a specific space, aka, the particular apartment unit that is being sold or purchased, or in contract terms a leasehold.
The purchaser of these specific shares has bought the right to a designated unit or apartment within this corporation, with the knowledge that ownership is translated into being a member of the cooperative in which rules and regulations are set forward by a duly elected Co-op Board by all members of this particular corporation development that must be followed at all times by all members of the cooperative.
Sounds like a mouthful, huh! But at least everyone knows the rules going in (and out) and for the most part, it works with everyone living there knowing where they stand.
Seems like this is the newest starter version (for now) for first-time home buyers! n
Anessa Cohen lives in Cedarhurst and is a Licensed Real Estate Broker (Anessa V Cohen Realty) with over 20 years of experience offering full service residential, management and commercial real estate services in the 5 Towns of Long Island as well as the tri-state area. She can be reached at 516-569-5007. Readers are encouraged to send any questions or scenarios by email to anessa@avcrealty.com.
