What is the difference between a condo and a co-op?

Manhattan is 80% co-ops and 20% condos while DC is predominantly condos. And even though from the exterior both a condo and a co-op can look the same they are two completely different creatures when it comes to ownership, financing, and property taxes. So what are some of the differences between a condo and a co-op?

• Ownership: The type of ownership a condo is fee simple or the same as a house while in a co-op you own shares of stock in the cooperative corporation
  

• Property Taxes: In a condo each unit owner is taxed separately while in a co-op you pay typically lower taxes
  

• Financing: It is easier to obtain financing for a condo than a co-op. A co-op has fewer lenders and usually requires additional documentation such as financial statements

• Tax Deduction: The owners of condominiums have the same tax benefits as if they owned a house while co-ops are more complicated
  

• Monthly Assessments: A condo includes maintenance and some utilities while co-ops include maintenance and property taxes
  

Other differences to consider when buying a condo or co-op is that condos are easier for resale than co-ops and co-ops can accept or reject applicant owners or tenants based on their financial and personal qualifications at their discretion.

Absorption Rates & The DC Condo Market

What is an absorption rate and why is it so important in real estate? An absorption rate is the percentage of the inventory sold in a given period of time. For example let's take a look at the condo real estate market today.

Figures obtained from the multiple listing service indicate the following:

Price/ # of condo units on the market

Less than 100K: 003
100,001-200K: 222
200,001-300K: 305
300,001-400K: 237
400,001-500K: 180
500,001-600K: 149
600,001-700K: 082
700,001-800K: 042
800,001-900K: 026
900,001-1MIL: 010
1,00,001-2MIL: 040
2,000,001+ : 015

TOTAL: 1,311

Currently there are 453 condos under contract and in the last 30 days 225 have been sold. At this rate the condo real estate market in DC has approximately 6 months left to exhaust all the inventory in the market.

Another way of looking at it is by determining the absorption rate. In this case the absorption rate would be 17%. A percentage above 25% indicates a sellers market and below 15% indicates a buyer's market and anything in between would be considered a balanced real estate market. You be the judge. Is it a buyer's market, seller's market or do we have a balanced real estate market in DC, MD & VA?