Shelterforce
2025
David J. Thompson
The article discusses Sweden's housing cooperatives as a potential model for addressing the moderate-income housing crisis in the United States. While the U.S. has programs for low-income housing, there is a significant lack of support for moderate-income families. Sweden's cooperative housing sector provides ownership shares to low- and moderate-income families, contributing to nearly a quarter of the country's housing. The article highlights that Sweden's model includes a national organization with regional associations, a savings plan that prioritizes housing purchase for depositors, and political clout to access government funding. The author argues that implementing similar cooperative housing structures in the U.S. could help meet the growing demand for affordable housing, but currently, institutional capacity and government support are lacking. The article calls for increased efforts from housing activists and policymakers to develop such cooperative solutions to address the housing crisis.
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Shelterforce
Sweden's Housing Co-ops Offer a Model for Moderate-Income Housing.
By David Thompson
Previous versions of this article appeared in Cooperative Housing Quarterly and Shareable.
The housing supply crisis in the United States has hit low- to moderate-income households the hardest.
While the Low-Income Housing Tax Credit program plays a valuable role in increasing housing supply for low-income families, there is no similar source for moderate-income households. Without a targeted funding scheme, the supply is negligible, and so the demand for moderate-income housing continues to grow. In many urban settings, moderate-income households are priced out of homeownership of any kind.
Limited equity housing cooperatives (LEHCs) could be a supplier of permanently affordable home ownership for moderate-income households. But the format is just a dream without government funding and entities that can build co-op development capacity. Where should housing activists in the U.S. look to solve the problem?
A model that we could replicate is Sweden’s social housing, a category that includes nonprofit, cooperative, and municipal housing.
In the U.S., we use tax credits to subsidize low-income rental housing (for residents earning 30 percent to 80 percent of the area median income, or AMI) and we subsidize for-sale housing for the people who can afford it through tax deductions. However, we have no government funding to house middle- and moderate-income families (or those that earn between 80 and 120 percent of AMI). In Sweden, low-and moderate-income families have ownership shares in the same apartment buildings. Along with other social housing entities, the Swedish cooperative sector is a key active housing developer.
Sweden’s Housing Cooperatives
Sweden has the most housing co-op units per capita in Europe (based on countries with data reported by Cooperative Housing International) making up almost a quarter of all housing in the country.
About 350,000 of those units are part of HSB Riksförbund and 200,000 are part of Riksbyggen. HSB and Riksbyggen are two different national cooperative organizations that develop new co-ops and convert existing public and private multifamily units into housing cooperatives. In recent years, housing cooperatives have had the largest growth of the multifamily housing sector.
Let’s take a look at the largest, HSB. As of 2022, HSB’s cooperatives had more than 675,000 active members in over 4,000 tenant-owned cooperative housing associations, which own and manage almost 350,000 apartments and over 25,000 rental flats.
Want to live in one of the cooperatives? First, get your name on the waiting list. These waiting lists may be long in bigger cities, but shorter in small-to-medium cities, says Linn Matic of HSB.
Want to jump ahead of other people on the waiting list? Join HSB, open a savings account, and start depositing. There are nearly 125,000 people in HSB saving up for co-op apartments, their savings totaling 4.8 billion kronor, or nearly $500 million. The majority of those funds are used by HSB to develop new housing cooperatives.
The Impact of the Recession in Sweden on the Moderate-Income Housing Market
In 2023, Sweden entered a recession. As a result, there were a number of upheavals in the housing sector. Prior to 2023, to balance their books, many cities sold off their municipally owned apartments to private investor pools. SBB, one of the largest private real estate companies in Sweden, bought thousands of those rental units of formerly municipal housing, but was immediately incapacitated by rising interest rates. With its shares losing 90 percent of their value, SBB had to act to reduce debt.
SBB has borrowed new funds and sold off some of its units. It appears likely that it will place the remainder of its apartments into a new company by selling stock, using the incoming capital to pay down its debt. It is not yet clear whether that transfer will dissolve the apartments’ rent protections. SBB subsidiary Sveafastigheter is now Sweden’s largest listed housing company. The company has about 14,500 apartments and another 7,900 in project development or under construction.
Housing prices and interest rates are up in a very sparse market, and housing production is down. But now, with limited social housing options, there are far fewer municipally owned housing apartments at a reasonable price or rent for moderate-income families.
Whatever the outcome, this housing market crash will test the stability and dependability of the 100-year-old cooperative housing model for moderate-income Swedish households.
Lessons from Sweden’s Model for the U.S.
What can we learn from a nation where a quarter of the housing is in cooperatives?
- To meet local-level needs, Sweden built a national organization with a regional structure composed of independent housing cooperative associations.
- HSB benefits from a savings plan that rewards pre-member depositors with a housing purchase priority, and uses the nearly $500 million the pre-owners have saved as its development capital. The pre-owner savings roll over into ownership shares when new residents move into their apartments.
- The HSB organizations have the capital, resources, and personnel to pursue housing development opportunities themselves or in partnership with municipal authorities, private entities, or nonprofits.
- HSB and other cooperative housing groups have the political clout to ensure they have the same access to government housing dollars and programs that private, nonprofit, or municipal entities do.
U.S. Housing Cooperative Development Efforts
A limited equity housing cooperative owns an entire site and all the apartments and buildings on it. Each family living in one unit of that co-op owns a share. Under U.S. law, a share in a housing co-op gives the share owner the same tax standing and benefits as any other homeowner. The co-op members can use their votes to elect the board and approve the annual budget and corporate bylaws. The board then hires a professional management company to carry out the day-to-day activities of running the co-op. All units must be owner-occupied, so no apartments can be rented to others or listed on Airbnb.
The maximum price of shares in a LEHC is often set by state law and usually ranges from 5 to 10 percent of the unit cost of the original finished expenditure. The original share is also determined by either the square footage of the apartment or by how many bedrooms the apartment has. Shares in a LEHC can range in cost from $5,000 to $30,000. Shareholders are paid a return of about 3 to 5 percent per year. The monthly carrying costs of the co-op are calculated by either square footage or by number of bedrooms.
There has only been one small, measurable period of development of cooperative housing for low- to moderate-income households in the U.S. The core years of that period were from 1950-1970. In that era there was a fortunate abundance of both government financing and development capacity. Key elements were postwar funding of housing cooperatives (including the Section 213 mortgage insurance program without income requirements, and Section 221(d)(3), which provided below-market mortgage insurance for income-targeted households); two key development organizations (United Housing Foundation, formed by multiple New York-based labor unions and best known for building the 15,372-unit Co-op City in the Bronx, and the Foundation for Cooperative Housing); and a national post-war political climate supported by labor unions and cooperative organizations that committed to the development of low- and moderate-income affordable housing.
Since that era, there have been a couple of citizen-based efforts in New York City and Washington, D.C. Other than that, cooperative housing is seldom seen, heard, or spoken of. The few individual housing co-ops that appear once in a blue moon are neither starting a sector nor making a movement.
The shortage of housing for moderate-income households is a crisis, and the market can’t serve the demand. Limited-equity housing cooperatives could provide permanently affordable, moderate-income, and owned homes in the U.S.
However, at this time, we don’t have the institutional capacity in the U.S. to develop new cooperatives to meet the need. We clearly require many parts of what Sweden has built. U.S. housing activists, labor unions, and cooperators must fill the gap with local, state, and national capacity and a well-funded government program promoting moderate-income home ownership.
About the Author
David J. Thompson
David J. Thompson with Thompson Housing has co-developed non-profit and co-op housing that put roofs over 10,000 people. He was one of the founders and a previous regional director of the National Cooperative Bank.