Like in many other developing coulltries, critical shortage alld poor cOllditioll ofrnhousillg is one of the biggest urball problems ill Ethiopia, alld the problem is evellrnmore critical ill tOWIlS alld cities of the COUlltry where there is high rate ofrnurballizatioll. Bahirdar is olle mcl, city of the coulltry that has beell experiellcillgrndramatic rise ill its rate of urballizatioll.rnThe purpose of this study is to explore the nature ami magllitude of the IlOusillgrnproblem ill Bahirdar alld, primarily, to look illto the potelltials ami cOllstraillts ofrncooperalive housillg as a viable strategy to mitigate the problem at halld Towards thernfulfillmellt of this objecti.'e, members of housillg cooperatives who have beellrnulldertaking their projects ill the lastfive years were surveyed. A two stage samplillgrndesigll was used 10 select sample IlOusellOlds from the target population. At the firstrnstage, J 6 cooperatives were ralldomly selected Ollt of the total 48 cooperatives Ihatrnhave received lalld ill lite lasl five years. At Ihe secolld stage, J 50 cooperativernmembers were cllOsell from Ihe 16 coop eratives proportiollate to size. A stmcturedrnquesiiollllaire was admillislered 10 the sample populatioll. This was alsorncomplemellted with ullstructured illterview, site observatioll, alld documelltaryrnsearch.rnThe filldillgs of Ihe research revealed thallhere is a tremelldous .1IOrl/all alld poorrncOlldilioll of housillg ill Bahidar, alld yet there is 110 appropriate housillg .mpplyrnsystem to mitigate the problem. The private rental .,ystem (real estate developmellt) isrnentirely 1101l-existent, alld the public housillg system is both illsigllificallt alldrnineffecti ve. Evell tltough tlte cooperative way of housillg is illstitutiollalized tornaddress the tremelldous housillg Ileed, cooperatives ill gelleral have Ilot beell able 10rnbear fmit or Iw ve failed 10 realize the illtended outcomes. A IIII/Ilber offactors hillderrnIhe p erformance of housing cooperatives. The/illilillgs of tit is sludy illdicale Ihalrnproblems of land provisioll, housillg fi"an ce, alld illfrastmcture as well as higherrnIIOilSillg stalldards arefolllld to be most importalltfactors that severely preclude Ihernprogress of cooperatives