Nowadays, modern societies are concerned about the rising costs and scarcity of housing. Every new generation tends to own fewer homes compared to previous generations. This trend is easily observable. At the age of 33, approximately 60% of Baby Boomers owned homes, while only 50% of Millennials owned homes. link

Even Southern Europe, which is well known for its social safety nets, has not escaped this problem. Among people born between 1965 and 1979, the homeownership rate in their 30s was 63%, while for those born in 1980 and later it was only 39%. This represents a striking decline. link

Rents have also been rising, taking up an increasingly larger share of household income. Compared to 1998, the price of rent increased by 225%, making it one of the fastest-growing household expenses. link

While U.S. citizens spent only 24% of their income on rent in 2000, this figure reached 35% by 2022, significantly increasing the financial burden on households. link

What is a cause?

This housing crisis is caused by several factors. Increasing wealth inequality correlates with inequality in property ownership because a large share of wealth is stored in land. As a result, a relatively small number of people own enormous amounts of land. This problem is worsened by land hoarding and the unproductive use of land, while construction companies do not receive sufficient resources or investment to keep up with housing demand. This occurs because landlords collect rental income without necessarily reinvesting it into building additional housing, whereas construction companies require immediate and continuous investment to expand production. Housing crises have significantly reduced quality of life, with the 2008 financial crisis being one of the most prominent examples.

Finally, government regulations, zoning laws, various “protections,” and NIMBY (“Not In My Backyard”) activism have contributed to severe stagnation in apartment and housing construction, significantly limiting the supply of new homes.

But how would market socialism solve this?

The first and most obvious solution is reducing inequality. If housing ownership is not concentrated among large property holders, monopoly rents become much less significant. An expanded cooperative sector is associated with lower income inequality, as reflected in lower Gini coefficients. link

It should also be noted that large-scale studies in France and Italy show that cooperatives in the construction industry are often more productive than conventional firms, making housing more affordable and faster to build. One study estimated that cooperative accounting profits would have been 13.0% higher than those of conventional firms. link

Additional empirical evidence comes from Zurich, where rents in housing cooperatives are generally 20% to 30% lower than in privately owned apartments. This is because cooperatives use a “cost-based” rent model rather than a “speculation-based” one, significantly reducing costs by prioritizing the interests of residents over speculative returns.

Germany has also experienced significant success with housing cooperatives. Housing cooperatives manage approximately 2.2 million apartments. Despite the modern trend toward professionalized management, their user fees remain comparatively low even when adjusted to local average rents. Because their objective is to provide quality housing rather than maximize rental profits, members typically receive “contracts for use” instead of traditional lease agreements. This expands access to affordable housing and reduces overall housing costs.

Housing cooperatives also encourage greater community participation. The Uniform Partnership Act in the United States makes key partnership rights non-transferable and, unless otherwise agreed, provides for an equal division of profits among business partners. This creates incentives for tenants to improve their communities because they directly benefit from their cooperative’s long-term success.

Additionally, the development of cooperative banks has historically improved living conditions in rural regions by providing access to credit for people who were previously excluded from traditional banking. This enables low-income workers to obtain financing and join housing cooperatives.

In rural Argentina, the Peumayén Cooperative emphasizes that maintaining the social fabric requires improving housing for its members. Providing better living conditions is viewed as essential to preventing rural migration and making it an attractive option for younger generations to remain in the countryside. link

Uruguay is widely cited as an international leader that has integrated housing cooperatives into its national public policy to promote sustainable development and affordable housing. link

In Egypt, one-third of all households are affiliated with one of approximately 2,320 housing cooperatives, which have successfully built around half a million housing units.

Additionally, cooperatives have achieved significant success in improving housing quality. The Republic of Korea has established 177 “housing welfare self-sufficiency enterprises” that emerged from poor neighborhoods. These organizations now use the cooperative model to improve housing quality while simultaneously creating jobs. link

A key reason for these benefits is that stakeholder-owned housing models generally produce greater net value for residents than investor-owned models. Ownership structures that are not based primarily on capital investment often generate higher overall benefits for the people who actually use the housing rather than for outside investors.

In conclusion, housing cooperatives have demonstrated positive effects not only on housing affordability but also on housing quality. They provide evidence that societies can efficiently and prosperously meet housing needs without placing control over such a fundamental social necessity primarily in the hands of capital owners.

  • blarghly@lemmy.worldEnglish
    2·
    19 days ago

    I like this idea. You’ve provided good examples and evidence. But I wonder what your suggested first implemention steps are.

    In particular I wonder - if cooperatives are so much better at providing housing, then why arent there more of them already? Are there particular environmental factors that need to change, or is it simply a matter of cultural consciousness of the idea?

    • GlebOPM
      1·
      19 days ago

      I would say there are a few problems.

      First, there is overregulation. In general, cooperatives face a significant number of regulations and restrictions that prevent them from operating efficiently. I already mentioned NIMBY activism as one example.

      For example, the 2015 Investment Compact in Italy forced large cooperative banks (those with more than €8 billion in assets) to convert into public companies (SpA). The principle of “one member, one vote” was replaced by share-based voting, reducing cooperative governance. In 2016, additional reforms required small cooperative credit banks (BCCs) to join larger banking groups or face liquidation, reducing their autonomy.

      Second, cooperatives often redistribute economic and monopoly rents to workers or customers. While this lowers prices and increase of benefits members in the short term, it also reduces the amount of money available for reinvestment and investors attraction.

      Third, there is capital concentration. In Germany, the barrier to entry for housing cooperatives is approximately €1,000. Wealth inequality allows large capital holders to accumulate housing assets and benefit from economies of scale and risk diversification, making the market structure more rigid. Stakeholder-owned housing models generally produce greater net value for residents than investor-owned models, but investors still control most investment and housing development.

      Finally, there is the agglomeration effect. The efficiency of cooperatives increases as the number of cooperatives in a particular location grows. This happens because they develop mutual support networks, specialized institutions, and legal structures that benefit the entire cooperative sector. However, because the cooperative sector remains relatively small in most places, cooperatives cannot fully benefit from these agglomeration effects.

      The most effective approach would be to remove taxes and regulations on cooperatives while also reducing restrictions on their investment strategies. The Marcora Law provides a good example of a complementary policy. Implemented in Italy in 1985, its main purpose is to allow workers to buy failing companies and convert them into worker cooperatives. Under the law, the government provides workers with low-interest loans to help restore and operate these businesses. Additionally, introducing education about cooperatives and their functions in schools would be beneficial.