Cohousing makes sense - and more DOLLARS?

Much has been written about intangible benefits of living in Cohousing. Many anecdotal statements suggest the day-to-day cost savings are also possible. There is, however, almost no data-based information addressing changes in economic value for Cohousing compared to (superficially) similar condominium developments.

A cohouser at Jackson Place Cohousing (Seattle, WA), sent me a paper by James Mayhak. Mayhak recently graduated from the University of Washington with a degree in Urban Studies. His study compares appraisal data for Cohousing homes in the three City of Seattle Cohousing communities (see below) with nearby homes in non-Cohousing condominium complexes.

His paper looks at changes in property values between 2003 and 2007 to better understand the economic value of "Cohousing-ness.". He wanted to answer the question; Can commercial developers build seemingly beneficial cohousing projects while maintaining their financial viability?

For more information on the data and methods, see his paper (Seattle Cohousing Market: Analyzing Supply and Demand through Appraisal Data and its figures).

What did he find? Some quotes...

This research seems to indicate that the market values of cohousing units appreciate at a rate higher than those of nearby condominium units. While there are limitations to this small-scale study, the results of this research suggest that there is an unmet demand for cohousing units that could be satisfied by private-sector housing developers. (p. 3)

The results of this research do show that cohousing units appreciate at a higher rate than condominium units when improvement values are considered alone and when combined improvement and land values are considered. (p.19)

The higher rates of appreciation seen in cohousing units do seem to suggest that the demand for cohousing units is not being met at the same rate that the demand for condominium units is. Given this information, the commercial development of cohousing complexes is seemingly much more justified and warrants further research. (p.19)

And the paper's conclusion (p. 21-22)

As was established in the literature review, cohousing communities seemingly offer many important benefits to their residents: environmental sustainability, economic security, social capital production, and gender equity. Those benefits aside, this research was aimed at discovering whether or not cohousing units were valued in a comparable manner to condominium units within the Seattle Metropolitan Area’s real estate market. Interestingly, the cohousing units outperformed the condominium units in terms of appreciation, perhaps indicating that there is a significant unmet demand for cohousing units in the Seattle area.

It’s important to note that while condominium laws were first written in the 1960s, the ownership structure itself only had just began to flourish in the 1970s (U.S. HUD, 1980). Condominiums, appreciation rights aside, now occupy a rapidly expanding segment of the American housing market. Should cohousing developments continue to offer rates of appreciation similar to condominiums, they may one day occupy a sizable portion of the market as well. At the very least, cohousing communities may become common enough that local, state, and/or federal governments will feel compelled to streamline the development process through legislation aimed at clarifying the ownership structures of forming cohousing communities. When this occurs, the United States will likely experience the same boom in cohousing development that Denmark did, and more of its citizens will be able to enjoy cohousing’s substantial benefits as a development pattern.

Mayhak is quite clear about the study's limitations and makes specific recommendations for future studies.

A particular issue is that today's real estate market is different from the period of 2003 to 2007. This time span does not include the more recent decline in real estate values. Has the decline in value been slower for Cohousing homes compared to condominium homes? We just don't know, but as the movement continues to grow, we will see more studies that may help us understand the value of Cohousing (economic and otherwise).

City of Seattle Cohousing Communities:

• Duwamish Cohousing
• Jackson Place Cohousing
• Puget Ridge Cohousing