Is The Heyday of the Condominium Coming to an End?

Gee, this article sums up what goes on with tge discussions on this website all day, every day! And not everyone lives in a high rise condo. Making the tough decisions and finding a way to pay for it isn't easy for anyone. Still it seems weird that people who put down a roomful of stacks for the place they live in will also turn around and cheap everything out.

Sadly this will get worse before it gets better, so I definitely see de-conversion taking hold. Unfortunately, it'll do nothing to resolve the affordable housing problem.

There is an old joke that Condos are for the newly wed and the nearly dead. Both types fight dues increases. Newly wed say they will not be here when repairs are needed so keep dues low. Nearly dead said I am on a fixed income so do not raise the dues.

Nope, you hit the heart of the matter. People want things now and they want it cheap – basically, it’s how this country was established (a whole ‘nother conversation). I live in a townhouse community and the same issues exist there because people want the benefits of homeownership while pretending to live in an apartment where “the association” will take care of everything (by everything, I mean the litter and dog poop around the community and the noisy neighbors because no one knows how to talk to people and work out their problems without someone throwing punches, cursing, screaming or just pulling out a Glock and turning the neighbors and everyone around them into Swiss cheese.) Then the property values will rise without them lifting a finger and then they can leave just before the board has to recommend a special assessment to replace the roofs.

I continue to say (1) people need consumer education in high school where they can learn the truth about the cost of living (actually, we should probably start in grade school and add assorted concepts as kids get older) and (2) banks and mortgage companies REALLY need to start considering assessments as much as they consider everything else when it comes to a mortgage application. Yes, I know there may be issues with figuring out if the community is self-managed or has a property management company, and which one’s doing it, but we are past the point where they can or should get away with “it’s too difficult so we can’t/won’t do it.” (They really mean it’s too expensive and will reduce their profits).

This will mean HOA boards will have to get some training (continuously) on a number of issues, and they must be upfront with homeowners and tell them the truth, and not worry so much about being re-elected. You may not get re-elected and homeowners may reject the budget, but they still have to face reality, no matter how repulsive it is. As I get older, I plan to stay in my home as long as I can, but I also know if it becomes too expensive or too much for me to handle maintenance-wise, I may have to do something else. Which might then lead to another problem in finding adequate senior housing. I recently read a New York Times article where middle-class seniors are finding their current home no longer suits them, but it's too expensive to move to some of these senior communities that have all the pickleball courts and golf courses (like that 55+ community in Florida some call Disneyland for grown-ups {Florida people know the one})

Your first comment I agree with (regrettably, but I suppose people are too busy banning books to teach something the kids can actually use).

As for the second, I can be rather cynical about some things, so we'll have to agree to disagree on this point. After seeing how the banks and mortgage companies did little or nothing with the foreclosures THEY instituted in our community and we were left without a dime, I haven't seen anything they've done that convinces me they actually want to try to do something novel that might protect their investment. I recall you said you once worked for Countrywide, so I trust you remember the class action lawsuit against them for discrimination against people of color in their lending practices, yes? Remember the settlement of $335 Million with the Justice Department? Why should I believe anything they or other mortgage companies say about anything?

(Looking at you, Wells Fargo, and that $3.7 billion settlement you negotiated with the Consumer Financial Protection Bureau last year for "long-running accusations of widespread mismanagement that led to everything from incorrectly-charged interest to wrongfully possessed customer cars and foreclosed-upon homes".

You mentioned the problem with keeping up with which community is self managed vs. being managed by a property management company, but to be blunt, just because it's hard doesn't always mean you don't have to do it. Many things are possible - you may have to go to a few changes to get there, but if you want it and you can see the benefit in it, you'll usually make the effort. Granted, I've never worked in the industry, but perhaps you start with surveying the HOAs that do have property management companies and go from there. In fact, didn't someone start a company some years ago to help HOAs identify mortgage companies so they'd know who to contact if they were doing a foreclosure and there were (and still are) issues with figuring out who held the note? Someone has the answer somewhere and even if we wind up with databases in each state listing all the HOAs, we might get somewhere. It may not happen in your lifetime or mine, but we cannot continue as we have been.

Recently, I left an on-site condominium which has been in deferred maintenance for at least over ten years. I sent weekly reports to the Board explaining that once they knew that stairs were in seriously bad shape, it was their fiduciary responsibility to repair/replace; buildings as well. I sent this report weekly for over 52 weeks.

Their reserves were underfunded, the Board refused to raise fees, all in the name of "for the people". Luckily, they cancelled the contract with my company and went with a new management firm.

The manger whether on-site or portfolio can only "recommend" actions that the Board should take...let that sink in.

No Board of Directors can say, " we can't do the repair/replacement because we have no money". Their duty is to raise maintenance, special assess or take out a loan.

If the owner can't afford the price increase then yes, they will be forced to sell. My thought is that termination of condominium will begin within the next two years, especially in Florida with the price of insurance and results of milestone inspections plus SIRS. If the building doesn't pass first inspection, the results of roof replacement, stack pipe, electrical, etc. will amount to millions per building.

The day of the condo is over.

I think the following supports the points the author of the article makes.

April 2023 commentary from the condo board of a friend:

[Director Y] gave a verbal “heads up” to all owners that his analysis of last year’s reserve study of the condominium's financial funding of reserves necessitated a significant increase in Assessments as of January, 2024, that could be as high as thirty-five (35%) percent. This is not a Board position, which will only come after all members of the Board study the needs, investigate all options, including a “stepped increase” plan with changes each year to ease the personal financial stress on all owners.

Director Y has served as treasurer for around ten years.

The board had recently, previously indicated that it would be directly involved in confirming remaining useful lives and costs to replace of the various reserve components.

I believe the percent funded figure for the condo is at about 30%. "Percent funded" is the amount of money the association actually has in its reserve accounts divided by what it should have in its reserve account //at this point in time//.

If I lived at my friend's roughly 30-year-old condominium (around 200 units), then what would bother me are the signs that the Board either (1) does not understand the reserve study's recommendations; or (2) is "spinning" the results of the reserve study.

I say: Well done in every way.