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The Condominium v. Cooperative Puzzle: An Empirical Analysis of Housing in New York City

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Publication Date: July 2006

Publisher(s): Furman Center for Real Estate

Author(s): Michael H. Schill; Ioan Voicu; Jonathan Miller

Special Collection: John D. and Catherine T. MacArthur Foundation

Topic: Social conditions (Housing)

Keywords: cooperatives; property values; Community and Economic Development

Type: Working Paper

Abstract:

One of the enduring puzzles of New York City’s housing market is the persistence of the housing cooperative, despite the prevailing wisdom that condominiums are more valuable than cooperatives. In this article, we examine the theoretical advantages and disadvantages of cooperatives and condominiums, and apply these theoretical insights to empirically test whether there is a price premium attributable to condominium housing. We then use our findings to speculate as to why the cooperative form remains dominant in New York City and whether its dominance is likely to continue in the future. The empirical analysis is based on hedonic models of house values and uses rich data on apartments sold in New York City between 1984 and 2002.