Most of us have certain expectations about our lifestyle set by that good ole American Dream.  It paints the picture of all us with our own home sitting on a large lot, our own car, our own TV/computer/stereo/lawn equipment etc.  A nice picture for sure, but as personal finance people are pointing out more and more frequently, an expensive picture.

With the cost of food, energy and basic necessities rising rapidly, not to mention that many of us Boomers, single and married, have a beer retirement budget despite our champagne tastes, it may make sense to consider other options.  Co-housing not only has definite financial benefits, but some wonderful social benefits as well.

It would be fair to say that most Americans believe the ideal is to buy their own nice, big house, fill it with furniture and other ‘stuff’ and have their own shiny car sitting in the driveway.  It isn’t called The American Dream for nothing!  That ideal isn’t surprising since American society in general tends to place a great value on individual rights and property.  

Scott Burns, a popular personal finance columnist, points out, “Prosperity has raised our expectations. We expect to own our house, to have our own bedroom, our own bathroom, our own car, our own phone (preferably mobile), our own TV set, and we want to eat what we want for dinner, not what everyone else is having.”  

However, he says, “that makes life very expensive.”

Energy costs and the price of food and other basics are going up and not likely to come down anytime soon, making many mid-lifers worry about how they will make retirement ends meet.  

Many people are also beginning to become disenchanted with the excesses of consumerism and would like to simplify their lives.  Perhaps the kids have flown the nest and downsizing makes sense.  Or, the idea of living with good friends or family within walking distance becomes more appealing as we get a little older.  

In the face of these trends, the idea of settling into a close-knit community that fosters social interaction and significantly reduces living costs becomes much more appealing.  One such option that is gaining momentum is called co-housing. While it takes a number of different forms in practice, it has some essential characteristics.

What is co-housing?

A concept originating in Denmark in the 1960s, co-housing is an intentional community where residents are consciously committed to living as a community.  They actively participate in the design and operation of their neighborhood which is designed primarily to encourage social interaction.

It general, co-housing has four main characteristics: a "social contact design," which creates a physical space conducive to a strong sense of community; resident involvement in recruitment, establishment and management of the community; a non-hierarchical organization with no one individual in charge; and a collaborative culture fostering interdependence, support networks, friendship and security.

What does co-housing look like?

Social interaction is the key in a co-housing community.  For many, co-housing in the United States is a return to a time when people knew and were close to their neighbors.  

The physical design is meant to encourage both social contact and individual space. Private homes contain all the features of conventional homes, but residents share extensive common facilities such as open space, courtyards, a playground and a common house.  This common building usually containing a large kitchen and dining area as well as a living area and game area.  Often, residents attend a number of group meals per week, and community events are regularly planned.  

The housing itself is usually clustered with parking on the perimeter and walking paths designed to encourage interaction in the middle.  It is designed to create many opportunities for casual meetings between neighbors, as well as for deliberate gatherings such as celebrations, clubs and business meetings.

What are the financial benefits of co-housing?

Other than the social interaction, other benefits of co-housing are financial and environmental.  The cost of a home in a co-housing community ranges from $50,000 to $160,000.  Typically, since the community is planned from the ground up, being ‘green’ is top of mind. Shared space, resources and infrastructure mean lower costs.

Smaller homes mean less upkeep and heating/cooling costs.  Include the latest in insulation, triple-paned windows and materials and the cost savings can be significant. Because of the “green” techniques some communities are utilizing, only an estimated $50 per month will be spent on heating and cooling per family.