News Flash - Condos are Hit by Inflation Too

The Foundation for Community Association Research (FCAR) just released the results of a survey on how inflation is impacting condos and HOA's. Not surprisingly, 91% of the respondents stated that they saw an 'unexpected increase in expenses due to rising costs and inflation.' What is a surprise is the word 'unexpected.'

For far too long, condo owners are shocked when inflation doesn't just impact the cost of fuel, food or clothing - it also affects the cost of all of the goods and services they consume in the course of condo ownership. Somehow they just don't make that mental leap when it comes to their condo.

To a large degree the way condos are structured is at fault. Taking money from people every month without their full understanding of what's done with it is a conflict that simmers under the surface of condo ownership and erupts into an inferno when fees are increased. Although everyone is at the mercy of economic forces, owners turn to the board with the expectation that they can somehow control rising costs.

The survey results indicate that boards are responding by raising fees, although not as overwhelmingly as the managers who responded to the survey believe they should. A large percentage of the respondents plan to reduce expenses and contributions to the reserve. Expense reduction schemes include deferring maintenance, reducing landscaping and reducing amenities. Every one of these strategies are short-term responses to a long-term situation. Expenses are not going to go back where they were pre-pandemic.

I'm advocating for two things to change this unsustainable and potentially devastating scenario. Educate owners on the financial realities of their shared ownership by making financial information relevant and personal to them as individual owners. I can help facilitate that strategy. And start getting the financial house in order by focusing on the long game. That's called an Operating Plan and a Financial Recovery Plan, and I can help with that too.

Or, keep shuffling the deck chairs on the Titanic.