Whew! The last few years have been bumpy for homeowners, including those in HOAs. We’ve all felt the impact of record inflation. Sky-high real estate prices benefited some and stung others, while lack of inventory kept many homeowners in place. HOAs have faced rising insurance and well as other costs, while sea level rise and climate change trends are not far from our thoughts.

There are a few things that will impact HOAs significantly in 2023, but not all of them are bad. Here is a rundown of the top trends.

  1. More HOAs

While the number of new developments are somewhat limited in Maui County, nationwide the number of HOAs are growing. The Foundation for Community Association Research found that the number of HOAs grew nearly 1000% since 1980, as people are attracted to communities with a governing body looking after the neighborhood.

Statistically, homeowners benefit from living in community associations because the homes often yield higher resale prices than similar properties that do not belong to governed communities. Paying for services can benefit from a volume rate, lowering costs. And as more people choose to live in HOA communities, we are seeing increased legislation regulating them, including protecting homeowner rights and accommodating for changes like renewable energy and electric vehicles. Our recent article covers Legislative changes anticipated this year for Hawaii HOAs.

  1. Improved Communication

As the majority of homeowners adopt digital communications, more associations are moving away from paper letters which can be easily misplaced. Also, more timely updates can be delivered by email, text messages, websites and website portals.

Associations that adopt more than one avenue of digital communication increase communication with owners, which can have positive impacts. When owners are better informed about what is going on in their community, there is more engagement. This involvement can be expanded by implementing an online calendar or by using surveys. Between the board and property managers, tasks can be carried out more efficiently.

Connecting with a management company that has good and secure HOA software to addresses accounting, operations, reporting and more can increase HOA efficiency and access to information.

  1. Projects will cost more and take longer

Pandemic supply chain shortages coupled with inflation saw prices on most goods skyrocket. Even though we are seeing a bit of a break on construction supplies, such as lumber, everything is more expensive today. Once prices are raised, it is hard to go back to “normal.” With prices anticipated to remain high in 2023, HOAs should re-evaluate previous cost assumptions in their budgets to accurately reflect both annual and capital improvement costs.

Additionally, labor costs will continue to rise. The minimum wage in Hawaii increased to $12 hour in 2022, and will increase by $2 an hour every two years until 2028. Staffing shortages for skilled labor and professional services has also meant companies have to increase wages to remain competitive. Overall, increased labor costs add to a company’s cost of doing business, which is passed along to the HOA.

Being a bit flexible with existing plans may be necessary. Without further adding to costs, project end dates may be later than expected.

  1. Accounting for Inflation and Other Costs

Experts suggest that community associations need to be prepared to raise dues in 2023 to combat inflation. However, this is a tough decision in Maui, which has among the highest HOA fees in the nation. This is due to the age of condominiums in a tropical climate with higher maintenance costs, the cost of labor, and higher insurance costs.

Premiums for insurance have already climbed, and are not expected to decrease. Major contributing factors include sea level rise and worsening storms due to climate change, and the Florida condominium collapse in 2021. See our article and insurance impacts after that disaster, and our most recent update on how to reduce insurance costs. 

Ways to combat inflation include buying in bulk for operating supplies and entering into annual maintenance contracts to reduce price increases. HOAs may need to look at other cost reductions to avoid HOA dues that are unacceptable to owners.

  1. Environmental Upgrades 

In 2010, Hawaii was the first state in the nation to require new residential homes to have solar hot water heating. As Hawaii State laws and local ordinances continue to be more environmentally conscientious, HOAs would be wise to stay on top of these green trends. For example, Act 186 says HOAs cannot prevent an owner from installing an electric vehicle charging station (within certain guidelines). Late in 2022, the County of Maui adopted updated energy codes that incorporate many energy efficiency initiatives and further EV charging parameters.

As the effects of climate change become more evident, HOAs should be prepared to work with owners and find ways to incorporate environmentally friendly upgrades into their community.