Condos and HOA Confront Rising Insurance Premiums
By Amy Repke
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.