THE NEXT GENERATION

WHAT WILL THE NEXT GENERATION OF HOMEOWNERS, BOARD MEMBERS, AND COMMUNITY MANAGERS LOOK LIKE?

BY SCOTT SWINTON

Who is the next generation? The next generation looks something like my daughter who, with any luck, will be entering the pool of prospective home buyers in about five to 10 years. She’s lovely, smart, all-A’s student, and for some reason, hesitant to drive. At her age, I had been tearing up the roads already for years. And, because I am eyeball deep into HOAs, she will know all about what to look for as she braves the world of real estate and looks for her first condo or townhome.

She is a member of Gen Z. She missed the berating we heaped upon the millennials (Get a job, your Driver license, move out of the house, and stop texting so much FCOL!!). That’s shorthand for “For Crying Out Loud,” by the way.

But, according to research, she really isn’t much different from them. Pew Research, which I’ll reference a few times below, basically lumps them together.

My daughter will know much about HOA living as she selects her first home. She will know what the letters CC&R stand for. She will transition from her first apartment to her first condo with eyes wide open, rather than ignorant of the blessings and curses integral to HOA living. Many of her cohort will have grown up in HOA’s and will, like her, have a clue what they are about.

With over 55,000 HOAs in California, it’s less and less likely that you will be facing a board of directors with no prior HOA experience. This could clearly be good or bad – hinging on what their past experiences taught them.

The next generation of Community Association Managers will likely benefit from much of what my daughter will benefit from: a basic understanding of the role homeowners associations play in civil government. But what else will the next generation of owners, board members, and community managers bring with them? The answer to that question may be a key component in your ability to manage well into the next decade.

WHAT DOES THE NEXT GENERATION BRING WITH THEM?

1. EDUCATION.

According to Pew Research, “A look at older members of Generation Z suggests they are on a somewhat different educational trajectory than the generations that came before them. They are less likely to drop out of high school and more likely to be enrolled in college. Among 18- to 21-year-olds no longer in high school in 2018, 57% were enrolled in a two-year or four-year college. This compares with 52% among Millennials in 2003 and 43% among members of Gen X in 1987.” It goes on to say that, “Gen Zers are also more likely to have a college-educated parent than are previous generations of young people.”

Unlike in other states where the general trend has been for college enrollment to decline since 2010, educationdata.org shows California’s enrollment holding steady over those 10 years and up 108% since 1970. Hold this thought, because we’ll touch on this again later when we discuss housing, but for now understand that trends indicate the next generation may be a bit more cosmopolitan as a result of spreading their wings toward more knowledge. They might bring more technical knowledge to bear on specific issues, and possibly be more proactive in managing their community as a result.

2. COOPERATION AND DIVERSITY.

Pew Research Center surveys conducted in the fall of 2018 (more than a year before the coronavirus outbreak) among Americans ages 13 and older found that, similar to Millennials, Gen Zers are progressive and pro-government. Most see the country’s growing racial and ethnic diversity as a good thing.

Is it possible that the next generation will be less averse to the structure and restrictions of HOA living? One of the greatest hurdles for Americans living in HOAs is the added layer of restriction and oversight. Americans traditionally bristle at constraint. Think King George, the Boston Tea Party, and the Revolutionary War. We individualistic Americans have scoffed as European peoples, especially those under lingering monarchies with their proclivity toward sovereign deference, have capitulated to the creep of increasing regulation and social reorganization. “Show some independence!” we might shout.

But trends seem to be indicating that the next generation of Americans will be more amicable to being directed from the top than previous generations. If you’ve been around HOAs for any length of time, for better or worse, you might understand how this acceptance of a topdown structure could simplify the management of them.

Pew also mentioned an increased acceptance of diversity. Whether you’re ready to embrace greater government involvement or not, an embracing of diversity bodes well for a nation that is only growing more diverse by the day. Many HOAs are a safe-harbor for first-time home buyers from immigrant and minority populations. An increased appetite for diversity will be key to a stable and thriving community.

3. UNDERSTANDING.

Because of those 55,000 HOAs now in California, the next generation will understand just a bit more about HOAs than did previous generations. In the same way that you probably understand more about social media than your parents did at your age (Think chain mail and early online chat rooms), the next generation will know more about HOAs and their contribution to civil government.

With luck, they will have the opportunity to benefit from even more than a passive understanding. A pilot program is currently being developed by CACM in partnership with Cal State Fullerton to provide a certificate and career pathway for aspiring HOA managers through college. This is welcome news for the future of managed communities. I’ve interviewed countless Community Association Managers and many of them regret being unable to obtain some formal education for their role. This pilot program is a step in the right direction and hopefully the first strand for the HOA management industry in a critical web of academic acknowledgement.

I recently had a long conversation with a young realtor who spoke HOA. HOA is a language that I have not heard many realtors speak fluently. I hear much said, but when the words “resort,” “management” and “amenities” are tossed around alongside other positive community attributes, I wonder just how much they are really communicating about the responsibilities intrinsic to HOAs to that new buyer. If my new realtor friend is any indication, it’s possible that the next generation of home buyers will get a better HOA crash course from their realtors also.

MORE KIDS ARE BEING RAISED IN HOAS, BE THEY HIGH-RISE CONDOS, TOWNHOMES, OR SPRAWLING COUNTRY CLUBS, AND WILL INCREASINGLY BRING THAT EXPERIENCE WITH THEM.

Regardless of where the next generation lands, be it in the boardroom, behind a community manager’s desk, or as a homeowner, as a whole they are bringing a new set of values and paradigms to the industry. Is the next generation going to be pandemic aware? Probably a little, but probably not much more than the kids growing up in the 40s and 50s were World War aware, or those of us who remember Gorbachev are Cold War aware. Those are or were, in essence, one-time events – protracted though they may have been. But the awareness of changes in civil government to accommodate HOA living will be enduring and with luck, will seep into the cracks being discovered in the American Dream.

More kids are being raised in HOAs, be they high-rise condos, townhomes, or sprawling country clubs, and will increasingly bring that experience with them. This pandemic is pushing people toward less dense areas, and they will bring their understanding and acceptance of CID living conditions with them.

Consider another paradigm. Previous generations were transitioning into HOA living from a 1950s “American dream” concept and “settling” for HOA-operated communities was a tough pill to swallow. But with HOAs becoming the norm and successive generations now having been raised inside a more population-dense paradigm, new owners will likely come into HOA living with a better understanding of what they are buying into.

4. LEGISLATION.

A final consideration for the next generation is how some recent legislation will affect their interaction with the HOA. Let’s briefly go back. Remember the thought I asked you to hold earlier – about Gen Z and the Millennials valuing and capitalizing on educational opportunities more than previous generations? That education comes with a hidden consequence. Many among Gen Z and the Millennials are staying at home with mom and dad longer. No surprises there, we’ve been seeing that trend for over a decade now, but when that reality is combined with some 2021 legislation, a significant impact on HOAs emerges.

According to the California Department of Housing and Community Development website: “The California Health and Safety Code (HSC), Section 65583(c)(7), requires that cities and counties develop a plan that incentivizes and promotes the creation of ADUs that can be offered at affordable rent for very-low to moderate-income households.

ADUs (Accessory Dwelling Units) and JADUs (Junior ADUs) are tiny stand-alone homes built on your own lot (ADU), or small apartments carved out of the existing floor plan (JADU). If you look at the photos available on some contractors’ websites, and even the CDHCD website, those little ADUs look charming and inviting. You can really imagine grandma smiling through the front window as she happily scrubs breakfast dishes, or a briefcase toting grad student stooping to pull a weed or two on his way to his private front door. Let’s build some of those! The reality for your HOA may not be so charming.

With cost of construction on the rise and a high demand for affordable housing, the state of California has, as of January 2021, mandated a relaxation of the building code and other requirements that restricted ADU and JADU construction – and this includes language that will make it very difficult for an HOA to prevent the addition of these units in their community. The effects this will have on parking, noise, use of common area and pools, and the already fraught dilemma of renter to owner ratios will be interesting to follow.

Another obvious legislative banana peel looming for California’s next generation is CC-5551, previously SB-326. The “deck law” only spotlights the issues facing the next generation with regard to deferred maintenance. The wave of condos built under sub-par supervision and according to inadequate building codes in the 60s, 70s, and 80s are in rapid decline. The first several decades of owners blissfully ignored any meaningful maintenance, allowing systemic problems to metastasize behind the siding, stucco, and deck surfaces. The next generation will not only be facing assessments to address CC-5551, but they will also be facing assessments to deal with a host of other deferred maintenance challenges.

The next generation of managers and homeowners will be tasked with untangling the many laws that directly or indirectly affect their communities. And though Davis Sterling and then Davis Sterling 2.0 brought HOAs lightyears forward, the universe of adaptation necessary to bring the great social experiment of the HOA out of puberty and into adulthood is vast and rapidly expanding.

The good news is that the next generation seems up to the challenge. With experience and educational opportunities on the rise, my daughter’s generation will bring skills and ideas we won’t have thought to consider. If only they will get a driver license and a car to carry them around.

Scott Swinton is General Contractor and a Certified Construction Manager at Unlimited Property Services, Inc.