Set Your Sights On These Trends In 2023

By Todd Greisen, CCAM

It’s been said that to be able to predict the future, all you need to do is look back at history. It’s true that history repeats itself. The world has changed significantly in recent years, but it’s also said that the more things change, the more they stay the same.

As the dust settles on COVID-19, let’s look at some possible trends that will continue or likely develop in the world of HOAs and CIDs in 2023. Some trends will continue. Others appear to be faltering in the coming year.

Technology

One of the few positive outcomes from the pandemic was greater availability of remote work. Some industries have struggled to embrace it but not so much in our industry. Life balance has become more than just a cliche to be sought after. It’s now an expectation and requirement to attract the best talent.

For example, videoconferencing into board meetings is now mainstream and no longer leading edge. Even tech-resistant boards have had to acquiesce. Although the fear of this contagion is nearly gone, there’s nothing indicating that this trend will change. Technology continues to advance so that even site inspections can be done remotely. See Rob Buffington’s article on page 38 for more on this subject.

This next trend could be more wishful thinking than a real trend, so I may be going out on a limb with this prediction. I also look for our state to become less tech-resistant as well. Electronic voting for HOAs is a reality in many states, so why not here in California, arguably the most tech-savvy state in the Union? It may not happen in 2023, but one can only hope!

Employment

As reported in the previous issue of Vision Magazine, the “Great Resignation” has created increased opportunity for experienced management staff. CACM’s most recent Compensation & Benefits Study reflects this demand by salary increases, mirroring the hot job market in many other segments of the economy. The question remains: Will higher education fully embrace association management as a viable career path for younger generations? Expect it to be a positive trend that gains more traction in 2023.

But, look for this hot hiring market to slow. Think not? How’s your 401K performing these days? As reported recently by MSN, there will be less turnover and smaller raises as the economy cools. Recent decades have taught us how the tech industry is often on the leading edge when it comes to impacts of higher costs and lower demand. Hiring freezes and layoffs have begun and will likely continue in 2023.

Real Estate

We’ve also seen the beginnings of layoffs in real estate and mortgage banking. Like in 2008/09, homebuilders will feel this pain as well. As development construction slows, new HOAs will follow that trend, meaning fewer management openings in our industry. There are some markets that will slow less than others. Paying attention to real estate market specific trends helps you know where the job demand will remain higher.

Increased unemployment will begin to parlay into foreclosures and assessment delinquencies for associations. If you were around at the time of the great recession, you know well that when owners aren’t paying their mortgages, they certainly aren’t paying their association dues. In those years, housing prices dropped 33% as foreclosures flooded the market.

More recently, according to one survey, nearly three-quarters of pandemic-era homebuyers are now having regrets. For many markets, rising mortgage rates clashing with over-priced housing are a 1-2 punch for prospective home buyers. Young families simply cannot afford to buy. Well, at least not yet. High interest has begun to force sellers to cut asking prices in many markets.

During 2020 through early 2022, those who could afford to buy had the benefit of low inflation, which is no longer the case. Consumer inflation may become the third punch to the real estate market, pounding it even harder than the great recession. This time, the Federal Reserve doesn’t have the luxury of keeping interest rates low to bring demand and prices back up. They’ve got to raise rates to fight inflation.

Energy

Existing HOAs, particularly condo associations that bear much of the utility costs will also face significant increases in 2023. Politicians blame higher energy costs on the Ukrainian war. Planning for a normal 5% increase will be insufficient. Budget this coming year for at least 15%. Along with that and other increasing costs, make extra effort to help members understand these cannot be absorbed and must be passed on through assessment increases for 2023.

Insurance

Need I say this? Even if you haven’t been in the industry long, you know these costs are skyrocketing. Although, its cause is debated. Climate change is real and resulting natural disasters over recent decades are likely to continue. Our sun and the entire solar system continue to go through significant changes. Here on Earth, we’ve only seen the tip of a melting iceberg regarding insurance increases from these disasters. Those caused by humans, such as Champlain Towers, only fuel the flame of higher costs.

To summarize these doom and gloom trends, tighten your belts. Our world will continue the path of change in 2023. Managers’ ability to adapt to changes will be called upon more than ever. The good news is that we’re in a stable industry, even in times when instability seems to be all around us.

Todd Greisen, CCAM

Todd Greisen, CCAM, is the General Manager of Contra Loma Estates in Antioch, California.