New year, new challenges. 2023 is expected to be a tumultuous year for many, and the homeowners, condominium association and co-op industry is no exception. High inflation rates, new laws, and an unprecedented insurance market are expected to cause headaches for many communities. All of these issues will likely compound into greater headaches when dealing with frustrated owners and residents.
New Laws to Follow
The tragic collapse of Champlain Towers South condominium in Surfside, FL back in 2021 was the catalyst for a slew of new laws and restrictions being imposed on associations. Restrictions from Fannie Mae (FNMA) rolled out with an impressive swiftness, detailing exactly what measures must be taken by a majority of condominium buildings, especially coastal properties.
Already, several states are seeing similar ramifications in their state legislation. Florida notoriously sets the stage for HOA and condo law already, and a highly-visible disaster amplified that for many. Hawaii, Colorado, and Utah, to name a few, have already proposed new legislation to combat aging infrastructure and set forth new standards of maintenance.
This year, communities in every state should start preparing for potential changes to their legislation and get ahead of the curve if their state has not yet proposed any new requirements.
Improvements & Higher Expenses
The laws dictating new requirements for condo communities will heavily contribute to increased costs for condo owners, but that doesn’t mean that HOAs are out of the woods. The ballooning rate of inflation, a notable lack of livable wage opportunities, overall skyrocketing costs of goods and services, and a drastic increase in insurance rates will have a significant impact on all community associations this year and for years to come.
HOA, condo and co-op boards can expect to see higher costs for their existing vendors, higher-than-average increases in insurance costs (homeowners insurance in Florida is anticipated to increase 40%, which may indicate similar increases for related insurance protection), and greater costs for planned maintenances than previously predicted. As more and more condo communities scramble to plan repairs to community components in the same tight timeline, service providers for community associations will likely become backlogged and increase rates accordingly
HOAs can expect to have lengthy conversations with vendors when it comes to planning component maintenance and repairs, and negotiating achievable costs for ongoing services like lawn and pool care.
Community associations can also expect to see an increase in disputes amongst their members, very likely relating to both of the above issues. Those cost increases, coupled with increased costs of household goods and groceries (the USDA predicts a 12% increase for meats and baked goods this year, for example) is going to apply mounting pressure to homeowners everywhere.
High-pressure situations, especially involving financials, and additionally financials that are difficult to understand (like HOA operating costs) will undoubtedly lead to challenging situations for board members and community association managers. Being aware of this tension, especially in your board meetings and meetings where special assessments and added community costs will require votes, will be critical for HOAs, and condominium and Co-Op communities in 2023.
Find a Helping Hand
Juggling so many financially-fuelled frustrations is a headache no community needs–certainly not this year. If your community is struggling to manage the mounting responsibilities 2023 is expected to bring, Trident Management is eager to step in and shoulder the burden. Contact us today to learn more about how we can help your community navigate the challenges of the new year.