Falling economy

I was wondering what impact the slowing economy or recession if we are in fact in one has had or is having on your property.

As a Board member we all need to look forward and anticipate the negative effects of the slowing real estate market, increasing taxes, employment slowdown, and their effect on operating a condominium/HOA.

Have you had any negative effects on your property?
Has the number of foreclosures in your property increased?
Are unit owners remaining current on their common charges/dues?

With the rising costs of upkeep and the possible loss of income this is a situation we should be aware of for the future.

Here in NY working to keep the common charges at a resonable rate seems to be more difficult with each year. Costs are increasing for the operation of the property, the financial burden on the unit owners outisde their residence has increased and this leaves the Board caught in the middle to maintain the property and supply services without putting undue costs onto the unit owners.

Will this get better in the near future? I would think not.

I would be interested in hearing your thoughts..............

Have you had any negative effects on your property? --- No

Has the number of foreclosures in your property increased? --- No. In fact, had fewer the last 2 years than the 2 previous years.

Are unit owners remaining current on their common charges/dues? About the same rate as usual -- and the same residents as usual. In other words, same people are delinquent year after year. Seems they would figure out that it's costing them 2 to 3 times more to let it slide than to just pay it on time.

Does a fallling economy hurt your association.?
Sure it does, even if you have no foreclosures or no increases in the # of forecloures. Talk to people on the street or in your neighborhood. Gas prices don't discriminate, nor food prices or doctor bill's, and look how education costs are rising. If the BOD's are not ajusting their sights and reviewing their economic needs, they should be and should have done this last year. But, if your board it like mind it takes them months to gear up for their yearly budget and once that is discussed to death and some picture formed, it would take an act of god to make them tweak their program to meet the daily changes occuring. Why some board seem so cumbersome and why some seem to glide along is a mystery to me. After a regime is 10 years old I think they develop some kind of gene pattern that gets past from one board to the next. Most association BOD's are incubators for the next BOD and they follow their genetic transformation acquired from the previous Board. Good or bad, they will likely operate like their predassessors. I have been waiting a lot of year to go to a board meeting and have the President stand up and announce, "The annual meeting this year will be about how the Board has decided to spend the whole year going over our programs and infastructure, and come up with ways to cut our budget 20%." You would have to dial 911 to revive all the owners that fainted. This is all relevant to economics and how most of us as a family unit slip in and out of economic pressures, adjusting on the fly, so to speak. But our boards never seem to get beyond a Long Range Plan, and then finding ways and reasons to change the initial projections, which can take hours and hours of discussions and meetings to start the process, which is outdated when it is proposed to the owners and full of pencil changes.

MicheleD:

Just where is your area?

We are located in the northern NY metro area.

We have 132 condo units and I have served on the Board for 20+ years.

With the rising costs of maintaining a property that gets older each year.
The rising costs of water/sewer.
Insurance coverage.
Legal
Landscaping
Snow removal
management
The property has increases as far as the eye can see.

Now add in the higher expenses to the unit owners:
Add in the rising food costs.
Gas prices heading towards $4.
Employment concerns for many folks I speak with.
Seems he have a double edged sword with which the HOA/BOM needs to deal with.

Can you raise the CC to where they need to be and should be?
Assessments are the unit owners able to handle this? Or do you run the risk of pushing people faster into financial problems?
What areas do you cut back on to make up any difference?
What areas are on the must do list and what areas can be put off.

At our last Board meeting the MC told us he has seen a rise in the number of unit owners falling behind in CC payments on other area properties. If this trend continues this could affect the budgets of many HOA/Condo properties.

Throw in the lost revenue PLUS the legal fees of going after the unit owners for payment.

We had our reserve funds in CDs to generate additional income to be added to the budget now with the interest rates going down that added income will be cut by at least 1/2.

Serving as Board President for the last 5 years I have suggested very strongly to the Board members that we need to make decisions based on the financial health of our property even more then in the past. We must pick and choose carefully where we use the funds provided by the unit owners. But in general terms it would seem to me our job will be getting more difficult going down the road.

In my area if you speak to most people for more then 2 minutes you will soon hear about how the economy is affecting them or someone close to them and not in a good way. ( This requires of course you have your ears open.) As Board/HOA members we need to deal with the consequneces not only in our personal lives but in the lives of our property owners.

But then that is why we get the BIG bucks......

Good luck to you all.......

My "area" is central Kentucky.

We have 300 single-family stand-alone homes.

We have 2 homes in foreclosure.

The same 2 homes that started a foreclosure last year, got caught up, now are back in foreclosure again. Both are going through nasty divorces.

We have 10 homes in collection status (no liens filed yet) and 8 with liens (of which 2 are the ones in foreclosure).

We actually had more liens 4 years ago (13 liens). Of the 10 homes turned over for collection, only 2 are "new" (in other words, these are roughly the same 8 people who we have to send to collections almost every year. For some wacky reason, they don't pay until they get additional fees tacked on. Go figure. Why one would prefer to pay $275 versus $150 is beyond me.)

I've noticed more yard sales in our area than we've ever had. Some by people who have never had a yard sale in 11 years living here.

Perhaps they were backed into a corner and didn't have credit or cash and needed that stuff, knowing it would buy them a couple of weeks to get money. People do crazy things in desperate times. Around here car title loans and paycheck loans are huge, you would think people would realize they are getting screwed but most of them are desperate and don't see a solution.

Our Arizona Republic had an interesting article yesterday on what lenders call "jingle mail" - owners who are simply mailing their home keys to the lenders. These are owners who bought at the height of the market and now owe more than the home is worth. "These typically are people who can afford their mortgage but don't want to pay on a loan that is more than their house is worth. They'll live with the stigma or credit ding from a foreclosure just to get out from under their loan."
One example cited was a mother and daughter who bought a home in 2005, putting nothing down, with a loan that let them pay less than they owed, and now their loan is $200,000 more that the house is worth. They can easily afford the payments, but choose not to.
We have a vacant house across the street from us whose owners did just that. Only they had refinanced to the hilt when the market was up and now found they were paying on a mortgage much higher than the worth. They are now renting some investor's house for less money and are happy as a lark.

Mary, yes, that sometimes happens: either the foreclosee strips the house for money, or spite. Lenders are getting wise to it, but there isn't always much they can do ( it takes time, money, effort, caring, a program, etc.).

Sad part is, the new "owner" isn't likely to invest much to fix it up for resale, and will likely sell it "as is" to someone at a huge loss in value. Then, there is not much guarantee that the new new owner will fix it up to standards either.

and a cigarette hanging our t of their mouth and a pack in their pocket...right on Brian