It’s still all about the economy. The foreclosure avalanche seems to have slowed in New England, but community associations continue to fight a seemingly endless wave of financial issues as 2012 ends and 2013 looms. For this year-end edition, members of New England Condominium’s Editorial Advisory Board were asked to review events of 2012 and consider what communities might expect to see next year.
“Foreclosures are still keeping us very busy, but we see some signs that the non-payment of condo fees is getting a little better,” says attorney Stephen Marcus, a principal in Marcus, Errico, Emmer & Brooks, PC, of Braintree, Massachusetts. At the same time, says David J. Levy, PCAM, president of Sterling Services in Holliston, Massachusetts, payment problems seem to have moved from the mid-range properties to some higher-priced communities.
“The total receivables are lower today than two or three years ago,” Levy says, “but we’re seeing high-end places having collection issues they didn’t have at all back then.” Part of the problem, he speculates, is related to low interest rates being earned on investments. “People had CDs that were paying a good rate, but now they’re paying one-half of a percent. It’s having an impact.”
The anxiety can be palpable, as condo owners fret over home values. “Financial conditions are such that people still feel negative about their ownership,” says Stephen DiNocco, AMS, principal of Affinity Realty & Property Management in Boston. “You see it in the type and level of comments you receive; people are anxious, don’t seem positive. They’re more reluctant to see the big picture.”
And in the wake of the foreclosure crisis, the number of units occupied by non-owners continues to impact associations when insurers, banks and potential buyers are looking at properties. “Having a higher percentage of rented units goes to the underwriting issue,” Bernie Gitlin, CIC, LIA, executive vice president of Risk Strategies Company in Randolph, Massachusetts, says. “[Insurers] want stable associations, with good reserves. The insurance companies have always wanted that, and they’re not rushing to write” policies for properties that don’t meet their expectations.