At The Core | Condo vs. Coop

With the spring sales market in full swing, we thought it would be worthwhile to revisit the coop vs. condo debate and the pros and cons of each.  All too often we hear buyers are fixated on one versus the other, when instead a balanced perspective would suit them better.

Co-ops

Coops still make up about 2/3 of the overall home ownership market in NYC. That said, co-ops turn over at a slower rate, meaning that they represent slightly less than half of sales at any point in time.  Typically, co-ops trade at a discount to condominiums, and for good reason.  There are various aspects of these properties that are found to be more restrictive – the greatest of which is the limitation or outright ban on renting the property out.  Other limitations include:

  • Onerous renovation rules:  often renovations must jump over long and costly board approval hurdles or are limited to certain months out of the year, making large scale renovations a massive and long-term pain.
  • Pet ownership restrictions:  many co-ops either limit or altogether ban any pets, limiting the potential buyer pool right off the bat.
  • Financing hurdles:  co-ops require more cash down to purchase and look at your debt-to-income ratios when considering a transfer
  • Resale limitations:  when selling, owners are at the mercy of the board, which is hyper focused on price.  Since no one owns actual property but shares in the overall building, one sale “below market” affects everyone.  This board “control” was very helpful in the downturn, preventing fire sales.  However some buyers may be put off by limiting free market forces in this way.
  • Purchase process speed-bumps:  coops are known for their more-intrusive-than-a-root-canal application process that requires buyers to reveal more about their finances in order to get board approval. Again the flipside of this is that you have a building filled with financially secure tenants with less likelihood of being in arrears

Condos

Condos have been slowly increasing their share of the market consistently. This is because all new development comes to market in the form of condos.  Their greatest benefits are the inverse of the co-op downsides, which is why they command a 15%+ premium to their elder brethren.

  • Do what you want: basically, you can do what you want with your condo for the most part. Want to use it as a pied-a-terre?  No problem.  Want to rent it out indefinitely?  Check.  Want to renovate it in glistening gold inlay and swap the floors for concrete?  ‘Got you covered.  Want to add a diamond-collared Chihuahua into the mix?  Bow wow.  And if the market crashes, want to piss everyone off by selling it at 75% of its market value to buy yourself a bungalow in the Carribean? Pass over that pina colada!
  • Financing leeway: buyers can purchase condos by putting as little as 5-10% down in some cases, though 20% down is typically the norm.
  • Straightforward purchasing process: buyers will find a far more streamlined and standardized process, both in terms of the time it takes and the paperwork required.
  • Greater transience: due to the lowered limitations of condos, you may find yourself being the only owner on a floor filled with renters.  Typically, this greater percentage of renters comes with less care for the overall building or its residents.  Often this goes hand in hand with a lowered sense of community in the building.

Now, based on the above, you may wonder why one would ever purchase a co-op.  Simple:  if you are cash rich and know you want to lay down roots, raise a family and want to do so in a very stable community, biting the bullet on the application process may well be the way to go.   It’s worthwhile to try to purchase a unit as close to the condition you seek, to not bear the brunt of the renovation headaches.   On a closing note, many co-ops have seen themselves become less “competitive” in New York’s hot real estate market, and have become more lenient on the limitations outlined above to keep up.   So for you buyers out there, make sure to speak with your broker partner on the building specifics of each and every property, lest you miss out on the right property for your needs.

Date Your City | Washington Square Outdoor Art Exhibit

Twice a year this spectacular event showcases fine artists and craft artisans from around the area, nation and beyond – winning the highlight this month!  And just in time for the Memorial Day Weekend!  Self described by the organizers, the exhibit, “is a twice-a-year happening every Memorial Day Weekend, the weekend that follows and every Labor Day Weekend, as well as the weekend that follows that. Attendees come from all over and are a cosmopolitan mix, including art lovers, tourists, faculty and students from the area’s many schools and professionals such as interior designers.” Art lovers, come rejoice – and head on over to Washington Square Park, May this weekend!

Monthly Gem | 212 Fifth Avenue

This month we are featuring 212 Fifth Avenue as the monthly gem, and for good reason. Our team toured the beautiful Penthouse property that was as exquisite as its Madison Square Park location.  Fun fact:  representing NYC’s 212 area code, the developer was attracted to the building’s matching address as one of its many virtues.

As a neo-Gothic sky-scraper, this iconic tower has been recently converted to 48 residences boasting open floor plans, tall ceilings and oversized windows (most of which showcase mention stellar park and city views). Previously built as a manufacturing building, the 2-3 units per floor all get outstanding light that bounces off its solid oak and marble floors from the two to three exposures that every unit gets.

The amenities are exceptional for a boutique building, featuring a 24-hour doorman, concierge, cold storage, fitness center (with yoga studio and treatment room, playroom, game room, residents’ lounge, catering kitchen, screening room and valet parking. Although the building’s location provides it easy access to many subways, residents may just want to walk out into the park without leaving home turf.

Ask The Experts | When Should I Rent or Buy

One of the recent interviews we have given is with Business Insider, who wanted to know when is the best time to rent or buy in the city. Often times this is greatly variable and certainly dependent on local market happenings. In other words, if a new building with hundreds of units is coming to market in April, that would be the best time for that building to get in.  Similarly, if you’re in a rental property converting to a condo, that initial offering period before the building fully converts would be the ideal time to buy.

Short of such specific situations, we have generally found that the dark, dreary days of winter tent to yield the best deals. Why?  Simply put, people want to stay inside when it’s cold outside.  Do you want to unload a moving truck in a blizzard?  Do you feel like schlepping around to open houses with snow boots?  Neither do other people, and so transactions tent to slow, meaning that landlords and sellers alike need to sweeten their offerings a bit to get the rental or sale they seek.  The less foot traffic, the lower the likelihood of competition over the same unit, the lower the overall price tends to be.

Therefore, if you have the luxury of waiting for a certain time period to enter the market and you don’t mind the more limited choices you’re likely to have during that time, enjoy your summer and look to the winter as the time to find your new home.