Here is one area of New York City real estate that’s slowing down
Co-ops are not as popular in New York City as they were decades ago. It used to be that 85% of apartments in New York City were co-ops. But not any longer. People in New York aren’t as willing to pay their higher monthly fees — or deal with their persnickety boards.
There are two types of apartments in New York City that a buyer should be aware of, namely cooperative apartments (or called “co-ops”) and condominiums (or called condos). These are basically two types of legal structures for apartment buildings. The main differences are that co-ops usually have many more restrictions when someone wants to buy or rent an apartment. Often co-ops have many requirements that need to be satisfied before a potential buyer or potential tenant is able to buy or rent an apartment. The Board in a co-op building often requires interviews with the potential buyer or renter to determine whether the person is suitable enough to live in the building. Furthermore, co-op buildings are very restrictive in a landlord to rent out their unit, for example many co-op buildings request that the owner can only rent out their unit for 2 years and then the owner needs to move back into their apartment. This is of course a major challenge for investors who are looking to buy an apartment in Manhattan but never plan to live there.
Residents of co-ops aren’t typical homeowners: instead of the individual or family owning the apartment they inhabit, they own shares of a larger corporation — which in most cases, is the building. With it comes a lower price tag but higher monthly payments than other living arrangements and headaches like bigger maintenance fees, and more rules on what residents can and can’t do in their homes and on the property.
Although co-ops still dominate the housing supply in the city, they’re losing out to condominiums, which are units that usually cost more than co-ops initially but come with lower maintenance fees and have fewer rules, experts said. Co-ops make up 75% of New York City’s housing market, while 25% are condos, compared with 30 years ago, when co-ops made up 85% and condos 15%, according to Investopedia.
The co-op market apparently seems to slow down. The co-op inventory in New York City has become so stagnant that the number of unsold properties grew 20% higher in the fourth quarter of 2016 compared with the same time the year before, and asking prices are being cut 10% to 15%, The Wall Street Journal reported.
Source: Marketwatch, January 2017