Condos and HOAs Confront Rising Insurance Premiums
Residents living in condominiums, homeowners associations, and housing cooperatives could be facing increased assessments due to growing operating costs and expenses. According to a new survey by the Foundation for Community Association Research, 91% of community association managers, professionals, and homeowners surveyed report they are seeing unexpected increases in expenses due to rising costs and inflation.
Released today, the Foundation’s “Rising Costs in Community Associations” survey is the direct feedback from international community association board members, managers, and business partners— including accountants, reserve study professionals, and service providers.
According to survey respondents, management fees (92%), insurance premiums (91%), maintenance services (85%), staffing (74%), landscape services (72%), and reserve funding (64%) are the areas with the largest increases in costs.
When asked how they planned to address the unexpected costs, 73% of respondents report they plan to raise assessments, while 41% say they plan to reduce expenses, and 15% will lower their reserve funding contributions.
Forty percent of survey respondents plan to defer maintenance projects, and 31% are reducing landscaping programs, while 18% plan to reduce legal fees, and 14% will reduce community amenities. Renegotiating contracts, prioritizing projects, investing in energy efficiency, special assessments, utilizing contingency funds, and exploring bank loans are other efforts being considered.
As inflation continues to drive up material and supply costs, 87% of community association management companies say they plan to increase their fees this year, and 39% of these companies say their bids and proposals for community association services don’t expire.
The report further outlines best practices and considerations for communities when forecasting a financial plan, including current inflation conditions directly impacting condominiums and homeowners associations.
“As we witness inflation’s impact on the housing market, the results give us a better understanding of how these economic factors are challenging residents and the professionals who serve condominiums and homeowners associations,” says Dawn. M. Bauman, CAE, executive director of the Foundation for Community Association Research. “The new survey will be a valuable resource for communities needing to fulfill their fiduciary responsibility to homeowners while determining what products, services, and programs move forward.”
HOAresources.com explores questions and comments from community association members living in condominiums, homeowners associations, and housing cooperatives. We then assemble trusted experts to provide practical solutions to your most commonly asked, timely questions. We never use real names, but we always tackle real issues. Have a question or comment about your community association? Submit here for consideration:
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Amy Repke, Vice President, Communications & Marketing. Amy brings more than 20 years of experience to CAI. Her communications career began in television news where she worked as a producer, writer, and assignment manager for local and network news channels. Amy has been nominated for four Washington Regional Emmy awards for writing and producing. Amy is a graduate of Old Dominion University and received a master's degree in Strategic Public Communications from American University.