Co-op Affordability – By the Numbers

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By: Jordan Mann – BHC co-op alum and engineer.

My name is Jordan Mann and I currently live in one of Boulder’s housing cooperatives. Some of you may remember a letter I sent recently detailing the environmental sustainability benefits that come with living in a co-op. Today, I wanted to highlight the affordability that is associated with co-ops. I would like to preface this by pointing out that it is difficult to come up with exact costs of living since these costs are so variable. As a baseline cost of living for comparison, I used the average of:

  • the typical cost of living alone in a rental and
  • the typical cost of sharing a rented apartment with one other person as the alternative to living in a rental co-op. 

This comparison seems to be more “apples-to-apples” than comparing the cost of co-op living to purchasing a home and the costs associated with home ownership. 

There is a lot of talk in Boulder lately about the hollowing out of the middle class and how we can maintain a spot for middle income folk to live in the town where they work. There are some subsidies available for folks at lower income levels and the wealthy have enough cash that they can afford to buy even when prices are high. For someone like me with a modest income, cooperative living provides the opportunity to save enough money so that in a few years I will have the option of purchasing an apartment or home in Boulder if I choose to leave co-op life. For others at a lower income level, co-ops provide the ability to actually afford to live in Boulder and save enough to put some money into retirement funds, or have a little extra to put their kid through college.

Co-ops can save big on rent, but that isn’t the only place where co-opers are saving. The four key areas where co-opers save are rent, food, transportation, and utilities.

Rent

The average rent in the city of Boulder is $1189 for a single bedroom and $1804 for a two bedroom apartment, they are likely significantly higher in more desirable locations like downtown Boulder or the hill. The cost of a room in one of Boulder’s three centrally located co-ops is $550 per room. I currently share a large room with my partner in a downtown co-op, and our combined rent is $660 dollars per month. This is about one-third of what we would pay if we were sharing an average 2 bedroom apartment in Boulder and about half of what we would pay to share a 1 bedroom apartment. Another key element is that this house is permanently affordable. I know that the non-profit entity that owns this house will not spike the rent by 10% in a given year. Housing rates in Boulder go up at whatever the market can bear, while housing rates at the Boulder Housing Coalition (BHC) go up by about 2% per year. The added security of housing price stability also has value.

Food

The average cost of food for a single adult in the US is $362 per month. For someone like me, an adult male living in an urban area, it is even higher. At the Masala co-op, our monthly food costs are $160 per person. We are able to achieve significant savings because we purchase our food in bulk. Nearly all of the co-ops in Boulder participate in a joint bulk ordering system. We currently order food for about 100 people, which allows us to buy at a big discount. The other way we save is that we typically eat out less. The kitchen is the heart of a co-op. We prepare 5 community meals every week, and while these meals aren’t mandatory, they are highly attended. The kitchen is fully stocked with high quality ingredients, available to everyone, and there are usually leftovers for lunch in the fridge. My personal budget includes $160 a month for co-op food and about $40 dollars for other restaurant or bar outings. 

Transportation

Although some co-opers do own cars, we do everything possible to encourage co-op members to ditch their cars if they don’t need them. More than half of the Boulder co-op crowd is car-free and we believe that those who do own cars typically drive less since they have affordable access to other options, and co-op culture is supportive of alternatives. Every BHC co-op member has access to an eco-pass, a b-cycle membership, and in some cases an eGo car share membership. The average cost of owning and operating a vehicle in the US is an astounding $740 per month. The cost of depreciation, gas, maintenance, and insurance add up quickly. The co-ops could still do a lot to encourage car sharing in lieu of car ownership.

Utilities

I already wrote in about how the co-ops’ per capita use of electricity, gas and water is around a quarter to a third that of a typical Boulder resident. These savings combined with sharing internet, trash removal, and household goods purchased in bulk means that the cost of utilities and all household goods such as cleaning supplies comes in at $65 per month per person. Contrast this with a typical housing situation where 1-2  residents pay $65 dollars for internet alone, plus another $125 for electricity, gas and water, then add in household items, trash, snow removal, and other costs. When all is said and done, a typical Boulder resident can easily spend $200 a month on utilities and basic household items on top of your rent.

Bringing it all Together

Below, I have included a graph showing the cost of living for an ultra-frugal co-op member living in an illegal co-op eating every meal at home living life without a car, I included my real cost of living (for housing, food, transportation and utilities), and a co-oper living lavishly in an expensive room, not changing any driving habits, and eating out frequently.

Now, let’s take this one step further. What does this look like if these co-op residents were to save the money they would have spent at market rate over a 4 year time period? That is about the amount of time it takes to go through university, or for me the amount of time I might need to save up for a down payment on a home. I assumed that the BHC rent goes up 2% per year and the average increase on other rental units is 5% per year (this is below what we have seen the past few years). Let’s also assume these co-opers have been attending our frequent DIY finance workshops and they have decided to put their savings into a low cost index fund with an average return of 10% per year. Below is a graph showing the cumulative savings over 4 years between a co-op resident and a resident paying the market rate for a rental. On a monthly timescale, the extravagant co-oper was only saving $500 dollars a month. Over a time period of just 4 years even the extravagant co-oper has saved enough to seed a retirement account or pay off the average student loan after university. Someone like me or the frugal co-oper has saved enough to put a down payment on a home. Someone else may not have been able to save a significant amount in the bank, but they’ve been able to cut costs enough to actually live in the community that they work and play in, instead of needing to commute in from a less expensive suburb. This means that the people who work in Boulder with lower paying jobs can afford to live here.

Final Thoughts

The BHC’s vacancy rate has hovered around 0% for the organization’s entire 15 year history. Last year the Chrysalis co-op had 44 applicants for 4 spots. Living in one of these co-ops is a fantastic opportunity for an individual to be able to afford to live in Boulder or to save for their future. We need a co-op ordinance so we can give this opportunity to more people. We have the tools to solve many of our housing issues and we need to start using them! 

Thanks,

Jordan Mann

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