03.30.23

CIC Info Bytes are frequent, succinct updates that provide educational and engagement opportunities to help your community thrive!  Subscribe to receive CIC Info Bytes updates by emailJoin us on Reddit at r/HOA.

ISSUE # 62

CIC Info Bytes 03/30/23


CIC Info Bytes are frequent, succinct updates providing educational and engagement opportunities that help your community thrive!  Please forward and share this newsletter with your peers, neighbors and colleagues so they can connect and join.


All issues of CIC Info Bytes are available online and indexed from the omnibox search. 


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CIC Info Bytes Newsletter 03/30/23 - PRINT EDITION

SURVEY


Results of the 2023 Condo Questionnaire were disseminated to all participants last week.  Thanks again to everyone who contributed!

RANDOM INSPIRATION…

Seize the day with the Carpe Diem Condominium

South Africa Sectional Title Property Information

Ducks in a Row


Your association can, and in many cases should work closely with your vendors, but that does not make vendors your "colleagues" or "partners."  Whether formally incorporated or not, you should think of your community as a nonprofit corporation.  Homeowners who share a vested interest via their mandatory assessments are much like partners and/or shareholders of your corporation.   Alignment with a shared interest is the primary reason many CICs require that Board members (volunteer directors) own real property within the community.  The vendors your association hires cannot and will not share the same interest in the overall nuances and success of governing and operating your community as your homeowners.  




Ego fails as a license to volunteer.  Successfully governing and operating a common interest community (CIC) isn’t easy, nor is most of the knowledge required imputed by one’s personal and professional experience.  There are a lot of challenges for somebody with no flight experience: CICs are uniquely positioned as corporations AND hyper-local governments subject to federal law, state nonprofit and CIC-specific statutes, 100+ pages (typical) of governing documents with run-on legalese and supplemental procedural mandates (think Robert’s Rules of Order).

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You may have witnessed this scene at work, at your latest association meeting, or while socializing with friends or over a holiday dinner with extended family: Someone who has very little knowledge in a subject claims to know a lot. That person might even boast about being an expert.


This phenomenon has a name: the Dunning-Kruger effect. It’s not a disease, syndrome or mental illness; it is present in everybody to some extent, and it’s been around as long as human cognition, though only recently has it been studied and documented in social psychology.


In their 1999 paper, published in the Journal of Personality and Social Psychology, David Dunning and Justin Kruger put data to what has been known by philosophers since Socrates, who supposedly said something along the lines of “the only true wisdom is knowing you know nothing.” Charles Darwin followed that up in 1871 with “ignorance more frequently begets confidence than does knowledge.”


Put simply, incompetent people think they know more than they really do, and they tend to be more boastful about it. 

What’s behind the confidence of the incompetent?... — Angela Fritz | WaPo | 01/07/19


READ: The Ultimate CIC Challenge: Too Long, Didn't Read



You should never lie to a co-op board, but you don’t necessarily have to disclose future plans, either. But, ethically, is this a plan that will keep you up at night with guilt?

I Want to Buy a Co-op Now and a Piano Later. Do I Have to Tell the Board? — Ronda Kaysen | NYT | 03/25/23




San Francisco is forcing couple to remove sidewalk 'obstruction' — or pay $1,400.  It's a little free library.

— Aidan Pollard | Business Insider | 03/26/23



Kept at home during the pandemic, Americans embraced animal companionship: While estimates vary, Morgan Stanley said in a 2022 report that there were about 5 million more pets in the US than in 2019, an increase of 4%. Average annual household pet spending reached $770 in 2021, up 13% from 2019, according to the Labor Department — outpacing an 8.5% increase in consumer prices.


Bloomberg Intelligence predicts the US, where it costs about $1,520 a year to own a dog and $950 to own a cat, will remain the world’s biggest pet market, soaring 52% to $195.6 billion by 2030. But the surge is global: Europe’s pet market is expected to increase 43% to $159.7 billion over that span. In the rest of the world, the pet market is forecast to grow 72% to $137.8 billion.

Pandemic Pet Adoptions Propel Rise of a $500 Billion Global Market Nacha Cattan and Brendan Case | Bloomberg | 03/23/23



Getting Warmer with Kal Penn: Generation EV — Kal Penn | Bloomberg | March 15, 2023


Last Hurdle for EV America Is Clean Batteries: Getting Warmer With Kal Penn — Sophia Chalmer | Bloomberg | 03/16/23


United Nations Intergovernmental Panel on Climate Change (IPCC)  |   Sixth Assessment Report


The world’s leading climate science body, the UN Intergovernmental Panel on Climate Change, on Monday summarized five years of its own research with a stark warning: By the middle of the next decade, it may be too late to avoid a cycle of climate-induced disasters that dwarf what’s already happening across the globe. “Evidence of observed changes in extremes such as heatwaves, heavy precipitation, droughts and tropical cyclones, and, in particular, their attribution to human influence, has further strengthened,” the report states. It’s the final statement in the IPCC’s current series of global warming studies, and by far its most direct. The chance of evading the most severe impacts of burning fossil fuels is almost out of reach, scientists warn, unless radical changes are made—and immediately. “This report is a clarion call to massively fast-track climate efforts by every country and every sector and on every timeframe,” said UN Secretary General António Guterres. “In short, our world needs climate action on all fronts.”


But last year, humanity burned a record amount of fossil fuels, and more fossil fuel projects are planned. According to the IPCC, the world must make massive emissions cuts in the next 12 years to avoid overtopping the 1.5C threshold. To emphasize the grave nature of the crisis faced by humankind, the planet’s preeminent scientists and representatives from 195 countries agreed to a historic statement as part of their grim data: “The choices and actions implemented in this decade will have impacts now and for thousands of years.”

🏠HOUSING🏡

FWIW Good Reading: How Big Things Get DoneBent Flyvbjerg and Dan Gardner | 2023 | Penguin Random House Books


Housing Affordability


During recent meetings about the draft five-year plan, KCRHA implementation board members have repeatedly expressed skepticism about the scale and ambition of the plan, worrying that it proposes too many unfunded plans, too fast, and with too little prioritization to represent a real plan that can be implemented in the next five years.


Homelessness Agency Proposes Modest Changes to Ambitious Five-Year Plan — Erica C. Barnett | PublicCola | 03/20/23


Washington state's homeless population increased between 2020 and 2022. The cause of the rise is the same in the state's most populous metro as in other cities.

The number of Washingtonians who are unsheltered, in vehicles or in temporary shelter grew by 10% from 2020 to 2022, increasing by 2,288 people. Slightly more than 70% of that growth came from Seattle and King County, according to part one of HUD’s 2022 Annual Homelessness Assessment Report.


WA’s homeless population is increasing, new HUD report shows — Anna Patrick | Seattle Times | 03/27/23



'A holy war on sprawl': States seek to shape new housing development by limiting local control — Ben Adler | Yahoo! News | 03/18/23


Passed by the House earlier this month and under consideration by the Senate right now, HB1110 would legalize up to two, three or four housing units per lot in most neighborhoods, and up to six units in some, overriding local zoning laws that currently limit large swaths of cities to single-family homes. Other bills would ease restrictions on accessory dwelling units, authorize more lot splitting and allow denser housing near transit stations.


Should WA allow more homes per lot? Debate swirls in 3 local cities — Daniel Beekman  and David Gutman | Seattle Times | 03/26/23

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A bifurcated housing market… — Lance Lambert | Fortune; republished by Yahoo! News | 03/18/23


A Tale of Two Housing Markets: Prices Fall in the West While the East Booms — Nicole Friedman | WSJ | 03/27/23


Home Prices DOWN

The housing-market slowdown in the past year shows one of the main ways that the Fed’s aggressive interest-rate increases are rippling through the economy. Housing is one of the most rate-sensitive economic sectors, and high housing costs have been a big contributor to inflation. The Fed raises rates to fight inflation by slowing the economy through tighter financial conditions.

Home Prices Fell in February for First Time in 11 Years — Nicole Friedman | WSJ | 03/21/23



“US homeowners on average still have about $270,000 more in equity than they had at the beginning of the pandemic,” a source tells us.

These are the 4 states where home equity has actually declined — Alisa Wolfson | Marketwatch | 03/26/23


Home Sales UP

US sales of previously owned homes rose in February by the most since mid-2020, snapping a record year-long slide tied to rising interest rates and affordability constraints. — Augusta Saraiva | Bloomberg | 03/17/23



Additionally, 73% of those surveyed said they had regrets about buying their home, with expensive maintenance and hidden costs cited as the most common reasons.


Only 35% of homeowners say they had no feelings of buyer’s remorse after buying their home. In the 2019 version of this survey, 65% of respondents felt no buyer’s remorse.


90% of homeowners didn't realize how expensive it would be… — Mike Winters | CNBC | 03/17/23

The last few years have been among the most challenging for home buyers. The pandemic blew up prices as demand for single-family homes grew. Today, inflated prices, high interest rates and few active listings continue to make finding and buying a house extremely difficult…


Building was found to be cheaper than buying in 18 states. In Hawaii, the median-priced house was listed at $1,045,000, but the study found that building would cost only $551,000, about $494,000 less, the greatest savings discovered.


Where It’s Cheaper to Build Than Buy — Michael Kolomatsky | NYT | 03/23/23


With mortgage rates high and home prices still elevated, the monthly payment for a newly purchased home — assuming a 10% down payment and a 30-year fixed rate mortgage — was $1,176 more than renting an apartment at the end 2022, according to an analysis from the National Multifamily Housing Council, a trade group that represents owners of professionally managed rental buildings.


The cost of homeownership has surged 71% over the past three years, or an average of about 20% per year, compared to average annual rent growth of 6.3% over the same period. As a result, the premium owners pay over renters is now wider than it’s been since the third quarter of 2006, the report said.


Buy-or-Rent Premium Is Highest Since 2006 Housing Bubble — Paulina Cachero | Bloomberg | 03/24/23


Indeed, the median rent for a one-bedroom apartment in the US climbed nearly 40% from $1,770 in July 2021 to $2,106 in July 2022.  But rents are expected to soften — or even fall — this year as housing demand falls and the economy weakens.

Influencers make being a landlord with lots of rental properties seem easy. But a real-estate investor with 482 units warns newbies to not scale up too quickly. — AJ LaTrace | Business Insider | 03/25/23


The premium Americans are paying for a mortgage versus rent hasn't been this big since the housing bubble peaked 17 years ago

— Phil Rosen | Business Insider | 03/24/23

Built Environment & City Demographics


Nearly 1 billion people in cities around the world face water scarcity today and the number is likely to reach between 1.7 billion and 2.4 billion within the next three decades, according to the 2023 UN World Water Development Report, published on Tuesday ahead of a vital UN summit. Urban water demand is predicted to increase by 80% by 2050.


Number of city dwellers lacking safe water to double by 2050 — Fiona Harvey | The Guardian | 03/22/23


As flooding increases, these cities are designed to work with -- not against -- the water — Laura Paddison | CNN | 03/26/23





$10,000 prize up for grabs in Seattle's office-to-residential competition — Marc Stiles | Puget Sound Business Journal | 03/23/23


Why Wood Is the Breakout Architecture Star of the Early 21st Century — Amanda Kolson Hurley | Bloomberg | 03/23/23

Energy Updates


When it comes to heat pumps, bigger is not always better — Alison F. Takemura | Canary Media | 03/22/23


District heating is an underground infrastructure asset where thermal energy is provided to multiple buildings from a central energy plant or plants. Steam or hot water produced at the plant is transmitted 24/7 through highly insulated underground thermal piping networks.


This award-winning apartment heat pump can fit under a kitchen sink — Michelle Lewis | Electrek | 03/25/23


Did you know that hydrocarbons have favorable thermodynamic properties?  Putting the fossil fuel into heat pumps: R-290 propane refrigerant.


Scientists back propane in heat pumps - Cooling Post — Cooling Post | 03/18/23


Bosch unveils propane heat pump for residential applications — Beatriz Santos | PV Magazine | 03/20/23


Heat Pump Efficiency Vs Temperature Graph (COP At 0°F To 60°F) — Learn Metrics HVAC Systems



Adding Up The Benefits Of Geothermal — US DOE | Clean Technica | 03/21/23


The key to heating an 834-unit apartment tower under construction on the Brooklyn waterfront will be a hole in the ground.


Actually, it will be 322 holes, each about 4 inches (10 centimeters) across and exactly 499 feet (152 meters) deep — any deeper and New York state would consider it a mining project. These holes comprise the heart of a geothermal heat-pump system that is expected to reduce carbon emissions by 53% over a comparable building using conventional heating and cooling systems. When complete in 2025, 1 Java Street will be one of the biggest US residential buildings using the technology.


All-Electric Building Draws Energy From 500 Feet Below the Surface of the Earth — Will Wade | Bloomberg | 03/25/23


The US Department of Energy (DOE) is raising the bar for energy efficiency by increasing minimum CEER (Combined Energy Efficiency Ratio) ratings for room air conditioner units AND introducing standards for air purifiers.  View draft rule-making.


Window AC units and air purifiers in the US are about to get more energy-efficient — Justine Calma | The Verge | 03/24/23


Seattle Requests Federal Help in Planning “Low-Emission Neighborhoods” — Ryan Packer | The Urbanist | 03/20/23

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Utilities and other power players are cooking up plans to decarbonize our grid -- one of the top greenhouse-gas emitters in the United States. It's a puzzle.  Seattle utilities consider massive efforts that could help green our grid Brendan Kiley | Seattle Times | 03/22/23


N.B.   Thousands of homeowners rely on Puget Sound Energy to deliver natural gas.  Removing natural gas from the equation is much more complicated than it seems. 

Dollar$ and $ense Page

💵💰 DOLLAR$ & $ENSE 💰💵


Condo Connection's financial coverage is indexed to our Dollar$ and $ense page dedicated to all things CIC finance.

Dollar$ and $ense Page


The latest US banking crisis reveals a surprising cause: US Treasuries.  Silicon Valley Bank found itself in a position where it needed to sell Treasury holdings, as well as mortgage bonds backed by government agencies, at steep losses — driven by the Federal Reserve’s fastest rate-hiking pace in decades — after its clients started yanking out their money. “We always refer to Treasuries as the world’s safest asset,” says Paul McCulley, the former chief economist for Pacific Investment Management Co. “That’s from the standpoint of credit quality. That’s not from the standpoint of asset price stability. There’s a huge difference.”

— Kristine Aquino | Bloomberg 5 Things to Start Your Day | 03/29/23


SVB Collapse Shows US Treasuries Aren’t a Risk-Free Asset

— Liz McCormick, Ben Holland and Edward Harrison | Bloomberg | 03/28/23

Inflation and Monetary Policy



— Kristine Aquino | Bloomberg 5 Things to Start Your Day | 03/27/23



The US Federal Reserve raised interest rates by a quarter percentage point and indicated there may be more hikes to come. In doing so, the Fed signaled that, banking turmoil or not, its battle against inflation must go on. Forecasted rate hikes were unchanged, too. 


Chair Jerome Powell emphasized his belief that the banking system remains resilient… Treasury Secretary Janet Yellen said on Capitol Hill that regulators aren’t looking to provide “blanket” deposit insurance, despite calls from some quarters to raise it beyond the current level of $250,000.  — Margaret Sutherlin | Boomberg Evening Briefing | 03/22/23


Anyone out there betting the US Federal Reserve will actually cut rates this year has got it very wrong, says BlackRock. The world’s biggest money manager has taken a dim view of Wall Street wishful thinkers who expect rate cuts, given the continuing risk of recession. But BlackRock’s position runs counter to that of TD Securities and DoubleLine Capital, both of which contend the Fed is mistaken about the need to keep raising rates. The collapse of three mid-size US banks and the forced marriage of Credit Suisse to UBS may have prompted a rethink by some on monetary policy, but Fed Chair Jerome Powell made clear with a fresh rate hike that the inflation fight will go on.

— Margaret Sutherlin | Boomberg Evening Briefing | 03/28/23


SOMETHING has to give: Either the March jolt starts showing in the real economy, with tighter financial conditions flowing through to lower hiring and investing. OR the rate cut bets are going to have to go away, because right now the two don't seem consistent.

— David Goodman | Bloomberg 5 Things to Start Your Day | 03/28/23


“It’s likely that concerns about maintaining deposit levels have put upward pressure on some deposit rates at some banks,” says Ken Tumin, founder of DepositAccounts.com, which tracks bank savings and CD rates. Banks, he says, want to “shore up their deposits to reduce the odds of being hurt by a bank run.”


Some online banks, in particular, have increased deposit rates because it’s easier for their customers to move money to competitors, he says.

Banks may be hiking savings rates to hold on to customers amid SVB crisis — Paul Davidson | USA Today | 03/27/23


Americans are going all-in on cash. That could spell more trouble — Nicole Goodkind | CNN | 03/24/23


Investors are fleeing to cash in the biggest rush since the onset of the pandemic, according to Bank of America strategists. They predict equity and credit markets will slump in the coming months.  — David Rovella | Bloomberg Evening Briefing | 03/24/23


BofA Says Investor Rush to Cash Is Fastest Since Covid Hit — Farah Elbahrawy | Bloomberg | 03/24/23


Is the Global Banking System In Trouble?


“The supervisory process has not evolved for rapid decision making. It is focused on consistency over speed,” said Eric Rosengren, former president of the Federal Reserve Bank of Boston. “In a fast-moving situation, the system is not as well-designed to force change quickly.”

How Bank Oversight Failed: The Economy Changed, Regulators Didn’t

— Andrew Ackerman, Angel Au-Yeung and Hannah Miao | WSJ | 03/24/23

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For banks with assets between $1 billion to $10 billion, CRE loans comprised about 33% of the total held on their books, according to estimates by ratings agency Fitch. At the end of last year, CRE only made up about 6% of loans held by larger banks that had total assets of more than $250 billion, it said.


Goldman Sachs economists estimate the combined share of small and mid-sized banks, including lenders with less than $250 billion in assets, is 80% of the overall stock of commercial mortgage loans…


"Banks will be primarily exposed to CRE through bank loans on the balance sheet," … The total exposure of the U.S. banking system to CRE loans was $2.5 trillion at the end of December, Fitch said.


Analysis: Small U.S. banks imperiled by big office loans — Saeed Azhar and Matt Tracy | Reuters | 03/24/23


For much of the pandemic, buildings in central locations that feature modern amenities fared better than their less-pricey peers. Some even were able to increase rents while older, cheaper buildings saw surging vacancy rates and plummeting values. Now, these so-called class-A properties, whose rents generally fall into a city’s top quartile, are increasingly coming under pressure.


Rising interest rates have hit the entire commercial real-estate sector hard. Higher mortgage costs eat into landlords’ earnings and make it harder to refinance expiring loans. Rising yields on bonds and other securities also make real estate look less profitable in comparison, making buyers more reluctant to pay high prices and pushing down property values. Real estate analytics firm Green Street recently estimated that U.S. property values are down 15% since March 2022.


Not all commercial property sectors are suffering equally. While the values of hotels and rental-apartment buildings have fallen, these properties are also benefiting from inflation, which is pushing up room rates and apartment rents. Office buildings have seen a steeper drop in values partly because they are also grappling with weak demand from tenants who are cutting back on workspace. Green Street estimates that office values are down 25% over the past year.  Distress in Office Market Spreads to High-End Buildings — Konrad Putzier | WSJ | 03/28/23


"We're seeing tenants move out of commodity spaces and into the very best offices they can afford," David Smith, Cushman & Wakefield's head of global occupier insights, said. "It's left older spaces that haven't seen reinvestment less likely to find takers."...


Commercial real-estate financing is generally structured differently than residential mortgages. The loans often don't amortize and include only interest payments, meaning that when they expire, usually after a period of 10 years, owners must replace them with mortgages of commensurate size. In a market where building values have fallen — the National Council of Real Estate Investment estimated that average office values reported by its members fell 7.4% in 2022 — and lenders have become more cautious, that swap has become increasingly difficult…


"We are currently valuing those deals in an enormously wide band," Levy said of office loans, in particular. "50 to 90 cents on the dollar."


Office Doom Loop: Landlords Face a Reckoning As Companies Move to Fancy Offices

— Daniel Geiger | Business Insider | 03/30/23



Research Paper: Why do banks invest in MBS? — Itamar Drechsler, Alexi Savov, and Philipp Schnabl* | NYU | 03/13/23


U.S. Banks are sitting on $1.7 trillion in unrealized losses. That's not a problem—until it is — Will Daniel | Fortune | 03/23/23


Inflation’s clearly a global problem right now, and everybody’s focused on containing it before it gets unhinged. Inflation in the US and in Europe is going to stay higher for longer... The unprecedented amount of fiscal spending was really what kicked that into gear, not just in the US but across the world. And if you really think about it: Are we cutting back on that? We are — but we’re not cutting back on it as quickly as we put it in. And so it’s still lingering out there and it’s still going to create inflation.

—  Que Nguyen, chief investment officer of equity strategies at Research Affiliates


As banks fail and regulators strive to arrange rescues, there’s much talk that we’ve turned back the clock 15 years to the Global Financial Crisis. I’d like to suggest that instead we are finally confronting the costs of decisions made almost exactly 25 years ago, in the first two weeks of April 1998…  No, It's Not Like 15 Years Ago. What Matters Is 25 — John Authers | Bloomberg | 03/23/23


Sacked

Global Layoffs Extend Far Beyond Big Tech — Mathieu Benhamou, Jennah Haque, Phil Kuntz, Jo Constantz | Bloomberg | 03/21/23 

Keep it Reasonable



Common interest communities should follow best practices of democratic governments across the world by conducting open meetings where individual homeowners have the right to speak their mind for at least 2 minutes in a designated forum BEFORE the Board engages in its own discourse and decision-making relative to the agenda at hand.  


Accountability, consistency, empathy, honesty, integrity and transparency are concepts that resonate differently across the spectrum of homeowners and volunteer leaders.  Condo Connection advocates for reasonable decision-making based on civil, germane discourse that MUST necessarily incorporate the aforementioned qualities.  Sometimes it takes a heated debate to ensure that obscurity, half-truths and outright falsehoods are rooted out in the course of making decisions.  Don’t rob Peter to pay Paul by foregoing core tenets for the sake of being “civil.” 

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In a decision that jangled the nerves of some elected officials, the Massachusetts Supreme Judicial Court reaffirmed a basic liberty established by the founding fathers: the right to be rude at public meetings.  


[The Court] struck down as unconstitutional Southborough’s “civility code” for public comment at meetings, which required “respectful and courteous” discourse “free of rude, personal or slanderous remarks.”


The Constitution of the Commonwealth of Massachusetts dates back to 1780:  “There was nothing respectful or courteous about the public assemblies of the revolutionary period,” the court wrote in its opinion. “There was also much that was rude and personal, especially when it was directed at the representatives of the king and the king himself.”


The town’s insistence on civility “appears to cross the line into viewpoint discrimination: allowing lavish praise but disallowing harsh criticism of government officials,” the ruling said.  “Although civility can and should be encouraged in political discourse,” the justices wrote, “it cannot be required.”

Residents’ Right to Be Rude Upheld by Massachusetts Supreme Court — Jenna Russell | NYT | 03/17/23



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A Note About Ukraine

The people of Ukraine are undergoing tremendous displacement from their homes coupled with loss of life, tragedy and suffering.  Considering the global landscape can help us gain perspective in our daily lives.  CIC Info Bytes readers expressed their support for Ukraine last year.  Please voice your own support!