The economic realities today affect homeowner associations in their own unique ways. The first COVID summer of 2020 brought uncertainties and government restrictions that impacted projects and daily life in HOAs. Amenities were closed, pools had protocols, and meetings happened virtually. The summer of 2021 brought material shortages. So, what has 2022 brought to our world of community associations?
Gas prices have hit an all-time high and are projected to reach nearly $5 per gallon this summer. Lawn and snow vendors, in particular, are hurting. And check your contracts! Many of them have a clause about gas exceeding a certain dollar amount before a surcharge may apply. Fertilizer prices have also taken a massive price hike this spring. According to the US Department of Agriculture, some of the core ingredient such as nitrogen and ammonia are up 200%.
Another thing significantly affecting lawn and snow providers is what we we’ve been hearing about on the news for months – labor shortages. Last winter, the Minnesota Department of Labor estimated private snow removal companies were down 20% in labor force. These issues have started affecting lawn/snow contracts this spring. Some companies cut clients to reduce portfolios and limit non-profitable accounts. Some had significant rate increases at renewal time. Many vendors didn’t even bid new clients to control their capacity. Expect significant increases in your contracts in these areas this fall and next spring.
Production of building materials is also showing a COVID-related lingering affect. The US Department of Labor reported last year that 90% of roofing companies indicated they could not work at full capacity because there was a material shortage on shingles—due to the fact that factories were shut down because of COVID in that first summer of 2020. Cause and affect can take time. Material increases and labor shortages are not unique to any particular industry. Asphalt, concrete, roofing, trades, etc. are all fighting the same battles.
And what else has changed? Demand for projects is actually up. Early on in the pandemic we were all scared of the economic uncertainties. What we learned is that people are home more, and they want to take better care of the homes they are in. This applies to associations as a whole as well. Improvement projects to associations never slowed—in fact, they increased. All in all, project patience, service quality expectations, material options, and cost realities need to be put into a new economic perspective by HOA Boards.