INFLATION AHEAD Rising material costs, disrupted supply chains and higher wages all will impact association budgets. How can you help your community prepare for the increases? We have some suggestions.
A
By Scott Swinton and Rob Buffington
ssociation management has never been a boring job. Talk to any community manager who has been in the business for five years and they will have some good stories for you. But over the last 12 to 18 months, the entire industry has pivoted and the rules have gone out the window. Complaints are up, demands are getting higher and costs are rising across the board. Tens of thousands of California common interest developments were not only built in the 1960s to 1980s, but their funding schemes were also designed in that same era. Just as we are discovering systemic inadequacies in the construction of those buildings, we are also realizing deficits in the funding programs intended to maintain those same communities. The past two years have added energy to the
34
Vision Fall 2021 | cacm.org
tsunami of cost increases already headed for the shores of HOAs. CC-5551 “The Deck Law” and the 40-year problem of short-sighted reserve funding were already lifting tides higher than anticipated along those shores. Now, two years of inflationary pressure, material cost increases, and labor cost increases are really beginning to add up. Alas, if history is any indicator, the tragic collapse of the Champlain towers in Florida is almost certain to complicate things even more with additional waves of regulation. Sorry, that was a bit negative, but if we’re honest, the forecast leaves a lot of space for negativity. And, unfortunately, there’s more. Inflation is likely to be a real concern for homeowners associations. Just as financial managers encourage investors to, at a minimum, keep their money in an account that offsets the rise of inflation, so to HOAs must
