As we reflect back on 2022, it was a year of ups and downs in the HOA industry tied to the overall economic environment and ongoing efforts to emerge from the pandemic. Although your HOA properties may have had some unique situations to address, you most likely also shared some common results and roadblocks with others in your industry.
Now, as the year closes and 2023 is just weeks away, we wanted to share some of our own insights about the trends, challenges, and opportunities that we see on the horizon.
There are signs that HOAs will experience some growth in 2023. According to Foundation for Community Association Research, HOA growth has been steady since 2018 with no signs of veering from that trajectory.
While developers achieve sizable profits, homeowners also enjoy higher resale prices than non-HOA communities. Even local agencies appreciate HOAs for their ability to
privatize some public functions like snow removal or trash pickup.
With so many advantages, it makes sense that we will see more HOAs, offering you more opportunities to expand provided services.
Inflation was a significant challenge in 2022 and will also impact the HOA environment in the coming year. From supplies and materials to labor, repairs, and premiums, everything is becoming more expensive.
The concern is that association dues may have to rise or a one-time special assessment may be implemented to combat these inflationary pressures throughout 2023. However, there are also other ways to address rising costs, including focusing on achieving an optimum cash position that matches changing budgetary requirements. Other strategies, such as buying in bulk, negotiating lower prices with vendors, and signing annual vendor contracts, can also help combat inflation, helping to minimize or eliminate any association due adjustments.
With ongoing labor shortages that show no improvements in the near future, HOAs will have to continue to deal with supply chain issues, pushing major improvement projects farther out. It could also impact repairs and preventative maintenance, depending on what an HOA needs to do.
Flexibility is an important strategy when it comes to these longer project completion dates. Deadlines may need to change and be worked into reserve study and budgetary planning.
More HOAs are understanding that technology and digital transformation are integral to the efficiency and user experience. Software platforms for operational functions as well as apps for community interaction and communication are increasing productivity, lowering costs, and improving owner interaction.
There are now so many types of HOA management software available to address every aspect of managing properties. Examples include software solutions for security, accounting, maintenance and repair management, community updates, asset management, amenity bookings, and association payments.
Also, using software means access to so Boards and management gain new insight into operations and specific community issues. Doing so means reducing the impact of certain issues, lowering costs, and enhancing the overall experience for owners.
Like many types of businesses, HOAs are becoming more environmentally conscious. This is due, in part, to changing state and local laws as well as on the part of owner preference for “greener” communities and homes.
It will be more important to become proactive in this area, looking for ways to address new environmental aspects to homes, including greater bylaws and standards for solar panel and artificial grass installation. Amenities, including lighting, equipment, and landscape may need to change. Although this is not without certain challenges, there also may be opportunities to add value through EV charging stations or to save money through the addition of drought-tolerant landscaping and solar-powered lighting.
Then, there are other trends that may occur based on the current state of the business and economic environments as well as recent conversations that we have had with our co-op members.
No one wants a return to the foreclosures and empty communities that the 2007-2008 recession brought. However, with rising interest rates and inflationary pressures, some homeowners may walk away from their homes or have them repossessed through foreclosures.
For now, we have this listed as a wait-and-see trend that we may need to address in the coming months should financial duress return, also leading to an increase in unpaid association dues.
With more HOA owners working from home, they may have more time on their hands to pay attention to what others are doing in their community. While this can be good in terms of taking care of their own homes and participating in more social events, it can also lead to greater conflict and disputes. We have heard about how some of our co-op members are dealing with more personal disputes and complaints in their communities.
In 2023, this issue could continue so it is important to be proactive in acknowledging these issues before the disputes further divide your communities.
Airbnb and VRBO properties have been a contentious issue for some time around the country. Many communities are still divided on the issue. Now, there are other types of transient living arrangements, such as home sharing through Pacaso and home pool rental services within HOA communities. Plus, more properties have transformed into investor-owned rentals.
As more people look for living solutions and additional streams of income, these types of rentals and occupancies will disrupt the HOA community model and divide people on what should and should not be allowed. We plan to explore these issues in 2023 with help from our Innovia co-op members who can share their experiences and recommendations for addressing such trends.
What we can take away from these potential trends, challenges, and opportunities is that change is a constant. Working together, we can anticipate what may change next and be prepared to proactively adapt to the next wave of challenges and opportunities.
As part of the Innovia co-op, you have an opportunity to collaborate with other HOA Management Companies and leverage benefits like industry knowledge, expert strategic guidance, best practices, connections to talent, and many others. Before the year begins, contact us now to learn how to become an Innovia co-op member.