A housing cooperative is formed when individuals come together on a democratic basis to own or control the housing and related community facilities in which they live. Unlike traditional homeownership, cooperative members collectively own and manage the property, ensuring affordability and community involvement.

According to the National Association of Housing Cooperatives (NAHC), housing co-ops fall into three categories based on equity structure:

1. Market-Rate Housing Cooperatives

In a market-rate cooperative, members can buy or sell their shares at whatever price the market determines. This model closely resembles condominium or single-family homeownership in terms of purchase prices and equity accumulation.

2. Limited-Equity Housing Cooperatives (LECs)

Limited-equity co-ops impose restrictions on the resale value of shares to maintain long-term affordability. These restrictions are often tied to benefits such as below-market mortgage rates, grants, real estate tax abatements, or other subsidies. In some cases, co-op members voluntarily set these limitations to ensure future affordability for incoming residents.

3. Leasing Cooperatives (Zero-Equity Co-ops)

In a leasing cooperative, the cooperative corporation rents the property from an external owner, such as a nonprofit entity. Since the co-op does not own the real estate, members do not build equity, similar to renters. However, the co-op may have the opportunity to purchase the property in the future and convert it into a market-rate or limited-equity cooperative. Some leasing co-ops also allow departing members to withdraw a portion of accumulated cash reserves.

Additional Housing Cooperative Models

Senior Housing Cooperatives: Senior cooperatives are collectively owned and governed by their members, operating as not-for-profit organizations founded on humanistic principles. More than just a place to live, these co-ops foster a strong sense of community and mutual support.

Designed to enhance quality of life, senior housing cooperatives offer well-planned, socially supportive living environments. They often feature shared spaces such as workshops, libraries, and community gardens, encouraging social engagement and an active lifestyle.

Affordability is another key benefit. Senior co-ops are structured to provide financial security while protecting members’ investments, ensuring long-term stability and peace of mind. By combining community, affordability, and self-governance, senior housing cooperatives create a vibrant and sustainable living option for older adults.

Housing cooperatives offer a democratic and community-focused approach to housing, balancing affordability, stability, and long-term investment opportunities for their members.