Economic Uncertainty
Let’s be real, managing an HOA was never easy. But today’s economy is making it even tougher. Rising costs, interest rate hikes, and skyrocketing insurance premiums are squeezing HOA budgets across the country.
And this impacts all HOAs across the country.
Still, HOAs aren’t slowing down. In fact, they’re growing. Most new homes in the U.S. are part of an HOA. Homeowners continue to appreciate the structure, the amenities, and the way HOAs help protect property values.
So, how do you keep your community running smoothly when everything is getting more expensive?
Let's start by understanding what’s changed.
Inflation hit a 40-year high in 2022 and hasn’t fully cooled off. Vendor contracts, maintenance, and utility bills have gone up, sometimes by as much as 25%. Borrowing is more expensive, too, thanks to higher interest rates. On the flip side, your reserves might now earn a little more interest. A small but promising win.
Then there’s essential insurance.
This is becoming one of the biggest budget stressors for HOAs. Premiums have jumped sharply since 2021. In high-risk areas, some communities are seeing costs double or even triple.
And it’s not just property coverage. Directors and Officers (D&O) insurance is more expensive, too.
Homeowners are also feeling the pressure.
Mortgage rates are still near 20-year highs. Wages haven’t kept pace. And HOA dues have gone up significantly since 2019. Understandably, residents are asking where their money is going and expect clear, honest answers.
So what can you do?
This is where smart communication and the right technology can help. Online platforms make it easier to collect dues, handle maintenance requests, and keep residents informed. Budgeting tools help boards plan more accurately and catch issues early.
Pro Tip: HOA Simplified helps small boards streamline their operations with easy-to-use digital tools, so you can stay organized, save money, and respond faster when the unexpected happens.
The most effective boards right now are the ones staying focused on the essentials. Plan conservatively. Monitor expenses closely. Communicate often and clearly. Use tools that make management more efficient. With steady leadership, your HOA can stay resilient, no matter what the economy brings.
Key deifnitions that might help:
Inflation: The general rise in prices across the economy, which increases the cost of goods and services that an HOA pays for.
Interest Rates: The cost of borrowing money, set by the Federal Reserve. Higher rates make loans more expensive but can also increase earnings on reserve accounts.
D&O Insurance: Short for “Directors and Officers Insurance,” this protects HOA board members from personal liability when making decisions on behalf of the community.
Reserves: HOA funds set aside for major repairs or capital expenses. These accounts are usually invested in low-risk savings or CDs.
Capital Improvements: Big-ticket projects like roof replacements or road repaving that go beyond day-to-day maintenance.
Vendor Contracts: Agreements with service providers (like landscapers or janitors) that define the scope of work, payment terms, and renewal timelines.
Homeowner Dues: Monthly or quarterly payments made by residents to fund the HOA’s budget.
