Inflation, Collections, Recession... Oh My!
I first formed HOA Organizers in 2008, a time of financial volatility within our country. Seeing units in collections was commonplace. Recognizing that homeowners did not have equity in their homes was a frequent topic of discussion. After emerging from those difficult times, we lived through almost a decade of more certain financial times. When the world shut down in March of 2020, that security was ripped away from all of us.
For months, we have been hearing those dreaded words, “we are in a recession, and this is just the beginning.” The current economic landscape is best described as volatile and uncertain. We are living in a rapidly shifting, unpredictable world – a far cry from the “good old days” of 2019 when growth was steady, inflation was benign and interest rates were low. Here’s what our research indicates:
Elevated inflation will continue to be part of everyday life and will vacillate at levels above the Federal Reserve’s desired 2%.
Interest rates continue to climb, replacing the unbelievably low rates we had all experienced for more than a decade. This will be felt in all aspects of the economy, from the cost of financing to credit card debts.
Since the beginning of 2021, we started to see less people in the workforce, and we also saw the great resignation. Restaurants we loved remained closed or operated partially because they simply could not hire enough staff to operate. Due to the labor shortage, employees demanded more for their time. Employers paid significantly more in wages to meet the demands of their businesses.
The housing market is expected to decline over the next decade. With interest rates rapidly climbing, we have already seen a near halt in real estate transactions in our office. We expect this to continue. History has shown us that a downturn in the economy and the housing market usually means that financial hardships will follow. We expect to see delinquencies and an uptick in foreclosures in the coming years.
What does all this mean for you and for us? This means that we must be strategic about protecting our Associations and financials while also being as realistic and practical as possible. Because of the rapid climb in inflation, prices have soared in all sectors. We all have been impacted by Association’s vendors raising rates to keep up with the increased labor costs, insurance costs and material costs. We also have seen insurance rates rise for our Associations. Our plan is to stabilize our communities and budgets while factoring these new costs. The next step is to start thinking outside of the box and start discussions around ways to cut back on expenses without sacrificing service. In 2009, I was an award recipient through CAI-GLAC for Excellence in Education. My segment was specifically about cost-cutting audits and how to creatively find ways to cut back on expenses. Programs and opportunities were different then, but our team is actively working on uncovering all possibilities for savings and will be bringing our solutions and ideas to our clients. Moreover, we must continue to be vigilant and proactive about delinquencies.
Please join us at the ABCs of HOAs on December 10th. We will have a plethora of expert speakers who will talk more in depth about collections, assessments, financial forecasting, and more. You really don’t want to miss this year’s lineup and topics. We are in this together, and we are working side by side with you to protect your communities and your finances.