A 'third way' between buying or renting? Swiss co-ops say they've found it

52 lifeisstillgood 49 8/31/2025, 5:26:03 PM nytimes.com ↗

Comments (49)

wslh · 1d ago

awongh · 1d ago

This article is really low on actual facts about how these co-ops can actually operate.

I feel like the problem in the US isn't necessarily that the government won't directly pay for these kinds of things like they do in Switzerland, but that it's very very hard to finance a co-op, possibly illegal (that is, you wouldn't have the same legal protections a condo does).

I would be curious to see the finances of the buildings they mention in the article. Assuming that you could arrange the two major financial aspects: 1) financing at a level of a normal home loan 2) cut out the real estate developer profit margin, I wonder if a co-op model would become viable in the US.

Edit to add: Intuitively it seems like the math could work out, if you figure that a co-op takes the appreciation of the real estate out of the picture for the people living there, and that being able to rebalance that lost value towards the initial cost or towards future costs would be a trade-off normal people would be willing to make.

In that sense a co-op is more like an alternative to renting rather than an alternative to home ownership.

pcrh · 1d ago

Note that most people rent, even in the US. They either rent the property itself, or they rent the capital used to buy the property (i.e. a mortgage).

With that in mind, housing associations or co-ops and the like take the place of banks, that is, they possess the capital and rent the property to the residents, but keep a portion of the revenue for future renting, as a bank does for future lending.

The difference between the two is that the housing association is typically not-for-profit, and that in a housing association the resident does not accumulate capital, which allows for a reduction in costs compared to a mortgage.

manwe150 · 1d ago

I don’t have any numbers to counter whether it is typical of “most”, but when trying to buy, I was outbid several times by people who paid “in cash”, and that was for million+ dollar homes. So it might be they do “rent” the capital, but possibly from a source other than a bank (eg from their forgone returns on stocks instead)

awongh · 1d ago

That kind of cash too is just another form of cost- and I think that goes to part of my point which is that especially because of speculation the sticker price of a home is really inflated.

If the buyers don't have a profit motive (neither the builder or the lender) how much lower will the true cost be? It could be low enough for a non-profit co-op to own the building instead of a bunch of investors.

pcrh · 1d ago

Sure, some people do have "cash" to buy a property. However, the vast majority of home buyers do not, and many who offer "cash" may have pre-approved loans.

manwe150 · 1d ago

Google search say that the “true” cash purchases represent 20-30% of all purchases. Add to that the people that eventually own after a mortgage ends and it still may not be the most common, but it is not the small minority either.

pcrh · 11h ago

People who haven't inherited wealth can slowly accumulate capital in their properties, especially if prices are rising. They can use this to part-finance further property purchases.

This is the model most Anglophone countries adopt. However, what most miss in this model is that the cost of doing so is much greater than they realize. The most obvious extra cost is the interest paid on mortgages, which can amount to 2-3 times the value of the property by the time the mortgage is fully paid.

A further cost is politically imposed, in that governmental policies will avoid making homes more affordable, as this is perceived as a "loss" by many mortgage-holders and home owners.

manwe150 · 6h ago

> People can slowly accumulate capital in their properties

I thought this is actually one of those “myths people believe about owning real estate”. In most markets, it is a depreciating asset that takes considerable time and money to maintain at the original capital value. This is why the cost is much higher, like you said, but not exactly for the reason you said. The net present value of that added interest payment is typically very low. It is a competitive market. It is uncertain whether I’d come out ahead or behind if I pay off the mortgage on day 1 or put that equivalent lump sum in the market and use that asset to pay off the mortgage instead. The political cost isn’t merely perceived loss, that is a real loss as it should cause the sale price to reflect the actual depreciation of the asset of an pre-owned house instead of being able to claim the added value of getting ownership.

carlosjobim · 17h ago

Everybody pays "in cash" - cash that was just borrowed with a mortgage from the bank.

manwe150 · 6h ago

That isn’t quite true, since the mortgage happens after the sale agreement (exact wording and specifics vary by state law), and the sale typically has a cancellation clause if the mortgage cannot be secured per the various terms and contingencies of purchase. That is why “in cash” offers are preferred, since then the sale and payment timing is less uncertain and risky to the seller.

awongh · 1d ago

I think one way forward in the US is for a housing association to get the ability to have a mortgage that is a government backed housing loan, with a favorable interest rate. afaik right now that's very hard to do.

yupitsme123 · 1d ago

I think San Francisco has something like this with their Below Market Rate (BMR) housing program. You have to be below a certain income to be considered, and basically you get to pay a fixed monthly rate to "own" a place that can only be sold for a fixed amount. It always just sounded like rent to me.

I think that NYC's co-ops (TICs in San Francisco) provided an interesting alternative model. They usually require owner-occupancy, can't be rented easily, and are difficult to finance.

These restrictions eliminate investors and speculators, and shields the the units from the inflation that happens from fed intervention and super low rates.

The result is that they're usually priced a lot lower and appreciate more slowly than they would be if they were condos.

awongh · 1d ago

TICs are a scam though. They are just condos with less legal protections for the relationships between the tenants. They don't solve any of the cost of ownership issues or deal with the idea of appreciation of the value of the real estate. afaik it's actually much worse because you're combining the appreciation of the asset, but you can't sell as easily as with a condo.

yupitsme123 · 1d ago

Sounds like you want a super liquid asset that's not actually an asset because it doesn't appreciate, and also it needs to be really easy to buy, cheaply. That's unlikely to happen and what we have right now is probably as close as one can get to that.

I wasn't saying that coops or TICs are ideal, just that they show what happens when you remove the speculative and investment aspect as well as the subsidy of below-market interest rates and mortgages that any idiot can qualify for. The result is prices which are lower by 10-20%.

People seem to want an engineered, top-down, state provided solution that makes homeownership more affordable. But we've already tried many of those solutions and they just inflate prices and encourage speculation and securitization.

A better approach might be to end the various implicit and explicit subsidies on mortgages and homeownership, keep speculators, investors, and big developers out of the market, and focus on owner occupied dwellings. I think this would disinflate the housing market and allow it to get back to where it should be.

awongh · 1d ago

> end the various implicit and explicit subsidies on mortgages and homeownership, keep speculators, investors, and big developers out of the market, and focus on owner occupied dwellings

Yes, totally agree. I think my impression of TIC is that it's a legal loophole because condo-izing buildings isn't politically tenable, but offering a worse option is. A TIC owner still owns an asset but now it's just devalued because it's harder to sell.

My original thought was that a true co-op without the pressure of the owners accumulating pent-up capital in their home would be a healthier situation. Maybe that lost value can basically be recouped to make the overall cost of ownership lower. Maybe a different co-op legal structure makes it easier to pay a true market rate to live in an owner occupied dwelling, for a slightly different definition of "owner" (someone who doesn't plan to profit off the appreciation of their home, but still "owns" a place to live).

marcinzm · 1d ago

There’s a number of these types of co-ops in NYC although these are due to government legislation and I do not know if there are any less than decades old.

mamonster · 1d ago

It's all fun and games, but you need to remember that this is Canton Vaud, one of the most fiscally irresponsible cantons/states in all of Switzerland. The article briefly mentions is, but a lot of this "cooperative" housing is heavily subsidized by the canton itself (the article mentions the cheaper 99-year lease but it goes way beyond that) and the resulting shortfall in money is paid for by other people (i.e 100,000CHF yearly income in Vaud is the massive marginal tax wall in Vaud). I've still, to this day, not managed to find out any detail about how these apartments are valued for the purpose of the VD wealth taxes (You can impute house price based on comparatives or rent, here obviously rent would be lower).

throwaway47352 · 1d ago

This has nothing to do with Vaud fiscal irresponsibility. Cooperatives are all over Switzerland, very common in Zurich for instance they own 18% of the units.

https://www.zb.uzh.ch/en/zuerich/Money-makes-the-world-go-ro...

awongh · 1d ago

It also mentions that during covid there were co-ops that went bankrupt. But they don't mention what the mechanism for that was- mismanagement?

owenversteeg · 10h ago

I don't have any specific knowledge of Swiss co-ops, but I'd imagine it's some of the same reasons as other co-op buildings elsewhere: economic crash means residents can't pay rent or fees, improper budgeting for large future expenses that eventually come due, or poor construction or new safety requirements cause a huge expense.

In Florida right now, in the wake of the Surfside disaster, a lot of condos are struggling with solvency because of the cost of the new safety requirements. Then there is always new technology (asbestos, aluminum wiring, spray foam insulation, polyurethane cladding) that will one day have to be remediated. Then there is climate change.

I think the key is good management and good construction. Unfortunately, both of those things are very opaque for your average person.

mg · 1d ago

    his apartment ... two bedrooms, a small office, a
    south-facing balcony and it costs 1,760 francs
    (about $2,200) a month, around half the typical rents

I always find it impossible to grasp/compare rents if there is no mention of the size of the apartment. For all I know, this could be a 60m² apartment with 3 smallish rooms which goes for something like half of that price in Berlin:

https://www.immobilienscout24.de/expose/161188147

Or it could be a luxurious 300m² apartment with 3 big rooms that goes for three time that price:

https://www.immobilienscout24.de/expose/157476995

andimm · 1d ago

It is mentioned in an image description:

> Claude Waelti’s 1,180-square-foot apartment in Lausanne costs around $2,200 a month. The rent has barely increased since he arrived in 1991.

So about 110 square meters which is pretty good for number of rooms in Switzerland.

No comments yet

ExxKA · 1d ago

This is a big thing in Denmark and has been for several generations.

https://da.m.wikipedia.org/wiki/Andelsboligforening

The issue with them is that the loans to build the properties are socialised, so if the other members can not pay the debt, the entire loan is the responsibility of those members who can.

Also, the incentives of a cheaper than market rate flat, means that corruption and nepotism is rampant in those buildings.

It is not pretty in practice.

cnnlives71 · 1d ago

> Also, the incentives of a cheaper than market rate flat, means that corruption and nepotism is rampant in those buildings.

But if it were a flat/apartment, the owner/manager may not actually take good care of the apartment. Which is worse?

ExxKA · 1d ago

You mean if people living there were renting?

This is purely anecdotal, but I find that the buildings with professional management and purely renting tenants, look better and seem more well kept, compared to the smaller "Andelsforeninger" where its a volunteer management team trying to run it.

awongh · 1d ago

> Also, the incentives of a cheaper than market rate flat, means that corruption and nepotism is rampant in those buildings.

Maybe there's some middle ground between socialized housing that incentivizes people to take advantage of overly cheap housing, and a 100% capitalist USA style housing market where lots of people are 1 missed paycheck away from being homeless.

FirmwareBurner · 1d ago

>Maybe there's some middle ground

Maybe there is, but human history proves we can't easily reach a equilibrium where everyone has it equally good, due to human greed, envy, cronyism and corruption, making any kind of equality just a fairytale utopia.

So we just bounce between extremes because as always, few people strive have it good and the rest get screwed over in order to pay for the privileges of the select few. There will always be haves and have-nots, no matter how many thumbs the government puts on the scales to try to balance things out for everyone which only breaks things for the worst as they distort economic reality.

Meanwhile from the numbers I gathered, despite the "evil capitalism", statistically by most metrics, Americans enjoy the highest purchasing power for home ownership in the developed western world by a large margin. So Americans love to complain too much, but the truth is by the numbers, most of the world has it much worse than they do.

  1. Demographia International Housing Affordability | Lower median multiple = higher affordability (2025 Edition)
  Singapore  4.2
  United States  4.8
  Ireland  5.1
  Canada  5.4
  United Kingdom  5.6
  New Zealand  7.7
  Australia  9.7

  2. World Population Review: Housing Affordability Index | Higher index = higher purchasing power (2024 Data)
  United States  3.3
  Denmark  2.1
  Belgium  2.1
  Ireland  1.8
  Luxembourg  1.8
  Norway  1.7
  Sweden  1.7
  Finland  1.7
  Spain  1.7
  Netherlands  1.7
  Germany  1.5
  Switzerland  1.5

  3. Numbeo Property Prices Index | Lower ratio = higher affordability (2025 Mid-Year)
  United States  3.44
  Germany  8.5
  United Kingdom  8.71
  Italy  9.04
  Canada  9.45
  France  9.89
  Japan  11.34

awongh · 1d ago

I haven't dug into how they average these numbers out, but Singapore is especially interesting because their housing market is closer to just NY, SF or LA than it is to the general average of the USA.

In that sense they're doing really well. Actually their system is the hybrid market/subsidized one I theorized about above.

FirmwareBurner · 1d ago

That's why Singapore is only top on one ranking and absent in others while the US is consistently at the top of housing affordability in most rankings, probably because US is a lot bigger than just NY, LA and SF.

Refreeze5224 · 1d ago

I firmly disagree that history proves this. The history of certain countries, certain economic systems, and certain systems of social organization have proven inequitable, but most people are unfamiliar with the many systems that have proven workable, but have not provided for a small hierarchical cadre of people with coercive power over others. It's not surprising that this sort of thing is not taught within a capitalist or statist system, but they certainly do exist, and have throughout human history, which is much longer than the last 500 years or so existence of hierarchical states and capitalism.

See David Graeber's The Dawn of Everything for a deep dive into some of the many successful systems of human societal organization.

FirmwareBurner · 15h ago

You can disagree but the numbers don't lie.

fragmede · 15h ago

Of course they do. There's a reason why the saying is "lies, damn lies, and statistics".

FirmwareBurner · 13h ago

Can you prove those numbers lie? Because then what's the point of science and statistics? Should we just argue based on vibes then? Where does that get us when we start the conversation with the assumption that all data is always false?

fxtentacle · 1d ago

This is becoming more popular in Germany, too. In effect, future renters pool their money into a non-profit which will then build affordable housing, to be owned and inhabited by them.

https://en.wikipedia.org/wiki/Housing_cooperative

Refreeze5224 · 1d ago

It is refreshing to see one of the most vital elements to human survival treated as just that, rather than a mere commodity like gold, to be bought and sold with a focus on equity and profit.

This does not and has never made sense, in the same way that only buying food with an eye towards someday making a profit from it does not make sense.

It does make sense within our current economic system, which sadly does not make any distinction between the fundamental requirements of human life, and all other products or commodities. We all are worse off for not being able to see the difference and separate the two.

simne · 1d ago

Well, this so called "third way", as I know appear in US as private elder care infrastructure, or as charity.

When somebody become so weak (ill or old), cannot care for himself and unfortunately have no family, they could ask to local private care to live in their specialized hostel. And it is not always just ordinary hostel with one room for 5 persons, but some are more like classic motels, with rooms for two persons.

Also, similar infrastructure existed for a long time in Italy, under Catholics church, and I know few good young people, who grown there.

As I know in Northern Europe (Sweden), there are many community buildings (under municipalities), very cheap to rent and even possible to get social donations and not pay at all.

Existed also non-church homes with similar economy (and also not designed as charity), but their examples are not always good. For example, Pruitt–Igoe in St. Louis, Missouri, United States, becomes huge crime center. Other not good example, some bad districts in exUSSR (for example Biryulyovo in Moscow, or Orekhovo-Zuyevo in Moscow Oblast, Russia), also known for their criminal level.

From Pruitt–Igoe experience, people created few rules about so called social homes, and one rule, they must be non-comfortable, to motivate people to grow to commercial rentals or even to once buy own home; second, should be some power, who will constantly monitor residents for crime and immediately deport offenders. So they are not "Third way", they are just temporary solution of very old problem, and not easy solution, even not cheap.

https://en.wikipedia.org/wiki/Pruitt%E2%80%93Igoe

daft_pink · 1d ago

I’ve found in my work with clients is that generally multi ownership in real estate means significantly lower investment returns.

Generally selling a single piece of real estate that you entirely control has the highest investment returns. Things like condos are always competing with each other and coops can be even worse.

Maybe it’s more affordable because it has super low investment returns.

pcrh · 1d ago

That's precisely the point, to be honest.

Treating homes as investments rather than places to live is a significant contributor to their lack of affordability, as it creates two demands for the same property.

This phenomenon is not "necessary", but appears to be particularly common in the US, UK and other Anglophone countries, see this chart: https://i.imgur.com/h1CkkNE.png

daft_pink · 1d ago

I agree with you in a sense, but I also think when you put a lot of of encumbrances on real estate you essentially guarantee that it can only be used for that purpose almost forever until the government intervenes because you could never get the right holders to agree

awongh · 1d ago

Yeah it's crazy that everyone in america is like, "I need a place to live" and at the same time is also like, "I get a subsidized loan to make a huge real estate investment, let me balance my decision about where to live with what I want to invest in".

ori_b · 1d ago

Oh. Company towns.

No comments yet

pstuart · 1d ago

This should be embraced in the US as well. And we need it now, more than ever because of how the price of housing has jumped so much and will only get worse as private equity continues to hoover up housing stock.

sokoloff · 1d ago

This (and other interventions) will help to the extent that they cause more housing to be built.

If they will more than another change, it will durably improve housing costs. If it doesn’t make more housing, but only changes how it’s bought and financed, it’s probably just noise and distraction.

post- · 1d ago

We could also rein in private equity? Culture Study had a great episode about PE [0] recently, with some explanation of what started it and, if I remember right, some gestures towards how it might be brought to heel — or at least made less bombastically awful for most people.

[0]: https://culturestudypod.substack.com/p/how-private-equity-de...

whimsicalism · 1d ago

Private equity has lots of benefits that are never discussed because they make good bogeyman. Existing management is not always good, and I do not benefit from companies employing unnecessary workers and passing the price through to me.

pstuart · 12h ago

They very well may. But they are notorious for strip mining and killing viable companies, because they do.

jeffbee · 1d ago

PE has nothing to do with any of it. They are totally up-front, even in their prospectuses, that the only reason they are in this game is because witless dupes (paraphrasing) in local governments are too stupid to build houses. If we would build anything, they wouldn't be in the game.

whimsicalism · 1d ago

Private equity is not the cause of the housing crisis in the US and all they are doing is amortizing rental demand. Without private equity, the demand would still be there. Shocking how often this needs to be repeated.

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A 'third way' between buying or renting? Swiss co-ops say they've found it

Comments (49)