Seniors Flock to Co-Ops as Housing Option in Some States

Seniors are flocking to cooperative housing as a favorable option in some states, however, senior living developers don’t see much competition coming from the increasingly popular housing type. 

Of 103 senior housing cooperatives in the nation, 79 are located in the state of Minnesota, according to the Senior Cooperative Foundation of St. Paul, MN. The state is also home to the first senior housing co-op, 7500 York, built in 1978 in the southwest Minneapolis suburb of Edina, which is still active today.

Despite the popularity, senior living developers don’t fear that this housing product will increase competition for other senior living housing options, even when developing in states like Minnesota that have a prevalence of co-ops specifically designed for seniors.


“People do have choices in Minnesota, ones that fit their lifestyles and where they want to live,” says Steve Nornes, director of operations management for CSRA, a subsidiary of LCS Senior Living. “Co-ops are just another option.”

A national provider of senior housing, LCS manages a number of properties in Minnesota and Iowa, ranging from independent living to assisted living, as well as continuing care retirement communities (CCRCs).

Since many co-ops are niche-based and cater to a variety of individual preferences, more choices for the consumer doesn’t necessarily translate into increased competition for other senior housing types.


“The more choices a consumer has, ultimately as providers, we’ll be providing a better service,” says Nornes. “I don’t think that’s a competitive disadvantage.”

Favorable financing at the state level has allowed senior housing co-ops to thrive where other states have failed, according to Dennis Johnson, president of Cooperative Housing Resources, LLC, and board chairman for the Senior Cooperative Foundation.

“It’s a lot easier for developers and lenders to do business with HUD offices in Minnesota,” says Johnson.

That’s because most co-op projects designed specifically for seniors are “master mortgages” insured by Minnesota’s Department of Housing and Urban Development (HUD) under Section 213 of the National Housing Act, which insures mortgage loans to facilitate the construction of cooperative housing projects.

Neighboring Iowa has also experienced a shift in the growing popularity of co-op housing for seniors in recent years, according to an article from the Des Moines Register.

The state currently has about 15 senior cooperatives, which have arisen in response to a demand for more senior housing that allows older adults active lifestyles while also giving them stake in community operations usually via a buy-in fee that ranges from approximately $60,000 to $130,000 depending on the community.

There still exists a need for more senior housing in Iowa, especially as those age 65 and older represent about 10% of the demand for new housing between 2000-2010, according to the Iowa Finance Authority’s 2012 Iowa Housing Study cited in the article.

Additionally, the Iowa Finance Authority also cites that an estimated 7,600 Iowans over age 65 will move into group living facilities between 2010 and 2020.

But even with an influx in the number of senior housing cooperatives in recent years, many of these independent communities do not provide the care services an aging senior would need as time goes on.

“I don’t see co-ops taking away from other senior housing,” says Johnson. “We have about 10,000 seniors living in these buildings in the state. Minnesota has a population of over three-fourths of a million. While there’s a lot of [co-ops] here, it’s still just a small part of the population.”

Written by Jason Oliva

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