December 2023 CT

INFLATION... from page 44.

were attacking them from every angle. It was clear to see that what initially looked like a step in the right direction to a financial turnaround (higher rates of return on investments) was just a mere apparition. The increase in investment income was nowhere near sufficient to offset the increase in construction costs or lending rates. The final trend to be discussed is also the most obvious: increased prices for general goods and services. I am sure that we have all witnessed and experienced the impact of inflation when purchasing food, gas, or other items for our personal use. The reality of the situation is that associations are experiencing the same increases. What makes this so difficult is that these increases are impacting just about every line item on the association’s budget. Although the pricing increases on construction materials were more volatile, it is not to say that operating costs did not have their share of increases as well. Certain expense line items, such an insurance, increased 20% to 30% in just one year. This created a problem on two fronts for associations. Not only were the operating costs increasing, but the annual contributions to the replacement fund also required CONTINUES ON PAGE 48

were met with quotes that were well in excess of what they had originally anticipated. In order to make ends meet, many of these sites had to borrow money from a bank. Not only did these boards get hit with the sticker shock of the

“Operating expenses and replacement fund contributions have both increased significantly,

and for many associations, the only way to make ends meet was to increase maintenance assessments.”

initial construction quote, but they were also forced to bor row money at a substantially higher interest rate. No matter what direction they turned, it seemed that price increases

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DECEMBER 2023