Affordability

The principle reason for the affordability of co-ops is that the rent only covers the costs. No landlord profits.

Costs can be split into mortgage payments, operating costs and replacement costs. Mortgage payments are self explanatory, operating costs are what is needed to run things day to day (taxes, power, repairs, administration, etc.), replacement costs is money saved to replace expensive items (roofs, windows, heating systems, etc.).

The charts below show how these vary over time. The amount of the mortgage is fixed and interest rates are expected to remain approximately constant. Operating costs rise close to the rate of inflation. Replacement costs rise somewhat more over time. The resulting rent rises slowly at first (relative to expected market rent), drops when the mortgage is paid off, and somewhat more quickly after that due to replacement costs becoming a larger share of the total costs.