Sweden's Housing Co-ops Offer a Model for Moderate-Income Housing

Sweden's Housing Co-ops Offer a Model for Moderate-Income Housing

This article, published by Shelterforce on October 25, 2024, and authored by David J. Thompson, addresses the housing crisis in the United States, particularly the lack of affordable housing for low- to moderate-income households. The piece highlights the inadequacies of existing funding programs and draws parallels to Sweden's successful cooperative housing model as a potential solution.

The housing supply crisis in the U.S. disproportionately affects low- to moderate-income families. While programs like the Low-Income Housing Tax Credit assist low-income households, there is no equivalent for moderate-income families, leading to a significant supply shortage. Without targeted funding, moderate-income households continue to face increasing challenges in securing affordable housing, often being priced out of the market entirely.

In contrast, Sweden’s social housing system, which includes nonprofit, cooperative, and municipal housing, has proven successful. Approximately 25% of all housing in Sweden consists of housing cooperatives. Key organizations like HSB Riksförbund and Riksbyggen manage hundreds of thousands of cooperative units, making Sweden a leader in housing co-ops per capita in Europe. As of 2022, HSB alone had over 675,000 active members in more than 4,000 tenant-owned cooperative associations, managing nearly 350,000 apartments and over 25,000 rental units.

To access cooperative housing, individuals typically join a waiting list and may expedite their entry by opening a savings account with organizations like HSB. Currently, around 125,000 individuals are saving for co-op apartments, amassing nearly 4.8 billion kronor (approximately $500 million), which funds the development of new housing cooperatives.

Sweden entered a recession in 2023, which impacted the housing sector significantly. Many municipalities sold off their apartments to private investors to balance budgets. One of the largest private real estate companies, SBB, faced financial difficulties due to rising interest rates, leading to a reduction in available affordable housing options. This situation poses risks for the stability of the cooperative housing model, which has been crucial for moderate-income families in Sweden.

The article suggests that the U.S. can learn valuable lessons from Sweden's cooperative housing model. Sweden has established a national organization with a regional structure that supports independent housing cooperatives. The pre-member savings system, which prioritizes housing purchase for those saving for co-op apartments, could serve as a blueprint for U.S. housing activists.

In the U.S., limited equity housing cooperatives (LEHCs) can provide affordable housing for moderate-income families, but the institutional capacity to develop these housing solutions is lacking. Historically, there were more cooperative housing developments in the 1950s and 1960s, supported by favorable government financing. Today, there is an urgent need for similar support to address the housing crisis for moderate-income households.

In conclusion, the article highlights the potential of cooperative housing models like Sweden's to provide sustainable and affordable housing solutions for moderate-income families, urging U.S. housing activists to learn from these successful frameworks.