Wondering what 2023 holds for the community association management industry?
We were, too. That’s why Buildium asked 240 community association managers and board members about the challenges and opportunities they foresee for the industry this year.
They told us the community association sector is more popular than ever among developers, residents, and management companies—but there are several key challenges that community association managers and leaders need to address head-on, so they continue to thrive.
From shortages of team members, vendors, and volunteers to increasing competition among management firms, here are the six trends community association management companies should be aware of in 2023.
1. Staffing is a top priority as the labor shortage continues to strain teams’ resources.
Smaller community association management companies are competing with larger companies and developers for full-time team members and high-quality contractors, leading to higher staffing costs and smaller teams.
According to Buildium’s research, this is a leading challenge for the 85% of companies that plan to expand their portfolios throughout 2023 and 2024, prompting community association management companies to name staffing as their second-highest priority for the coming year.
2. Efficiency is a primary area of focus as teams search for ways to do more with less.
Technology is the X factor that allows community association management teams to take on more clients, even as their teams remain smaller than in the past. Streamlining processes like payments, communications, and accounting frees up time for the most impactful areas of the business, such as customer service and business development.
More than half of community association management companies told Buildium that leveraging technology to drive efficiency is a key aspect of their revenue generation strategy for 2023.
3. Competition for clients highlights the importance of high-quality customer service.
The Foundation for Community Association Research estimates there are 8,000 to 9,000 community association management companies in the U.S. In certain areas, smaller companies feel they’re being edged out by larger firms that can charge less for their service due to economies of scale.
Association board members told us they can feel the difference between customer service that’s personalized to their needs, and service that’s one-size-fits-all. This is where smaller companies have a competitive edge.
4. New development means new potential clients for community association managers.
Seventy-eight percent of new homes for sale are located in community associations. There are 358,000 associations across the country, and it’s estimated that 5,000 more will be formed in 2023.
This creates new opportunities for 88% of community association management companies that plan to recruit new clients over the next two years, with growth named as companies’ third-highest priority for 2023, according to Buildium’s survey.
5. Profitability is a challenge as companies balance the pressure to increase prices with the need to stay competitive.
Inflation has increased the cost of running associations across the board, from materials and labor (on the management side) to insurance and taxes (on the association side). Association boards are feeling the strain of pulling together sufficient reserves and funding for capital projects without raising dues or requiring special assessments.
Association management companies are under pressure to keep prices low to stay competitive—but 70% of companies feel it’s necessary to raise prices to cover their costs in 2023 and 2024. Our research found 43% of companies plan to expand the services they provide, potentially opening new revenue streams.
6. Community associations are struggling to recruit engaged, knowledgeable board members.
According to Buildium’s research, 38% of association board members said finding the people and resources necessary to keep their community running as a primary source of stress in 2023.
Current board members—80% of whom are 60 and older—feel frustrated with the lack of participation from newer homeowners; and boards that experience frequent turnover struggle to find members who have the knowledge to make important decisions for the community.
Overall, association boards and management companies feel more involvement in the community from homeowners is needed, in addition to greater awareness of their responsibilities as residents of an association.
These are some of the challenges and opportunities that association managers and leaders will face in 2023. For a deeper dive into 2023 community association management trends, download our 13-page report, which shares additional data and quotes from real community association management professionals and board members. Download your free copy now.
Buildium, a RealPage company, delivers an industry-leading, cloud-based property management platform that lets managers of residential rental and association properties take control of their business, whether in the office or fully remote. Backed by expert advice and relentless support, Buildium outfits property management businesses with intuitive software that’s the perfect balance of simplicity and sophistication.