Months ago, when we noted the recent spike in the popularity of NYC condos relative to NYC co-ops, the comparison came alongside much attempted soothsaying and no small amount of confusion. The absorption rate on NYC condos and NYC co-ops converge around the $1 million mark, but the way in which upscale Manhattan condos were outpacing similarly priced Manhattan co-ops was striking enough to note even then. That trend shows no sign of diminishing with news that co-op maintenance fees jumped $1.76 per square foot -- an increase of 19% -- over the past year. The condo renaissance -- an ambiguous, tenuous, neighborhood-by-neighborhood renaissance, but one all the same -- continues apace, it seems, in part by default. But what's going on with those NYC co-ops?19%, for real? How did Manhattan apartment-seekers get turned off to co-ops in the first place? The Journal's Brittany Hutson explained it fairly well back in June. "Foreign luxury buyers, a big part of Manhattan's luxury market, continue to buy and tend to favor condos because they're easier to acquire," Hutson wrote. "But high-paid executives in the finance industry, traditionally a big part of the market for luxury co-ops, aren't spending as much and are buying less. Those who remain in the market are having trouble meeting the stricter guidelines of the notoriously picky co-op boards." That jumping-through-hoops aspect of buying a NYC co-op apartment probably has something to do with their relative decline in popularity, but a 19% spike in fees is... well, it's pretty good, as reasons go. So, why did these hikes happen? "The main driver behind the fee increases has been a jump in property taxes brought on by rising state and local debt," Smart Money's AnnaMaria Andriotis writes. "Property tax revenue from New York City co-ops increased 9.68% to $12.8 million in 2009, the most recent data available, according to the NYC Department of Finance. Co-op boards looking to offset rising property taxes have few options but to raise maintenance fees, which shareholders (the people who purchase each unit) pay on a monthly basis separate from their mortgage." There are various advantages to investing in a Manhattan co-op or condo, of course, but this story offers a rich depiction of two reasons why many people searching for Manhattan apartments opt for condos -- in-your-business co-op boards to rising fees. Take it all together, and it wouldn't be surprising to see the gap between co-ops and condos -- which has favored co-ops dramatically for generations -- continue to narrow.
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Just Maintaining: Are Maintenance Fees Climbing on NYC Co-Ops Another Reason Buyers Favor NYC Condos?
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