Condominium assessments continue to go up, and so do the bills for taking care of the buildings.
But associations in general could be in better shape financially than they were a decade ago. They are socking more and more money into their reserve funds.
These and other trends are shown in the just-released “2014 Expense Analysis: Condominiums, Cooperatives and Planned Unit Developments” by the Institute of Real Estate Management.
The report, conducted annually since 1978, analyzes respondents’ previous-year income and expenses in 30 categories and makes one-year comparisons.
It is intended to help owners and managers benchmark their associations’ financial conditions and develop budgets.
For the 2014 edition, 2,131 properties throughout the United States and Canada participated.
More than half of the properties were condominiums, with an average number of 101 units each.
The responses are expressed in median percentages, which means half the responses were higher and half lower.
Among the highlights: Condominium assessments overall rose 3.1 percent, to $256.02 in 2013 from $248.34 in 2012.
When broken out by architectural type, low-rise properties increased assessments 7.8 percent, to $243.38 monthly, and town house properties increased assessments 0.04 percent, to $211.97 monthly. High-rise assessments increased 1.8 percent, to $433.19.
Assessments at high-rise properties tend to be higher than the others because their buildings are more structurally complex and they often hire more staff and security personnel, said Matthew O’Hara, IREM’s senior income and expense analysis manager.
A second IREM research tool, the Income/Expense Analysis Online Lab, organizes the yearly data to identify long-term trends. Monthly assessments for all types of condos, for example, jumped 36.8 percent during the past decade. However, they increased a mere 1.1 percent over the last five years.
O’Hara is reluctant to explain the numbers, but he noted that assessment increases were larger before the Great Recession began in 2008.
“The market was much different then,” he said.
Condo associations as a whole are building their reserve accounts, funds set aside for future capital repairs and replacements.
Last year, they set aside $555 per unit, almost the same amount as in 2012. Reserve contributions represent 22 percent of total budgets.
When reserve contributions are broken down by architectural type, low-rise properties added $515.62 per unit, and town home properties added $493.27 per unit. High-rises kicked in the most, $921.05.
These amounts represent between one-fifth and one-quarter of the respondents’ total budgets.
Associations overall have raised their reserve contributions by 66.5 percent during the last 10 years and by 18.1 percent during the last five years.
As for how associations spent their money last year, their total expenses increased 3.6 percent to $2,517.25 per unit.
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The repair and maintenance category, which historically accounts for the largest part of an association’s expenses, increased 10.2 percent to $965.37 per unit.
Looking back, repair and maintenance costs increased 21.9 percent over 10 years and 19.2 percent over five years.
“The number was pretty steady for a few years and then started to increase,” O’Hara said. “Since 2011, (respondents) have been freeing up some money to spend on repairs.”
Fixed expenses, including real estate taxes and insurance, made the biggest one-year jump of all the expense categories by increasing 17.6 percent to $386.98 per unit.
Fixed expenses increased 43.7 percent over 10 years and 5.2 percent over five years.
The responding properties vary in price and age.
Seventy percent reported market value between $90,000 and $300,000. Thirty-two percent have been built since 2000.
To order the 328-page 2014 report, call IREM at 800-837-0706, ext. 4650, or go to irem.org.