CIC Info Bytes

12.26.24

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.

CIC Info Bytes Podcast - Issue# 106
Support Condo Connection

ISSUE # 106

CIC Info Bytes 12/26/24

🔊 Listen to the Podcast of Issue# 106

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.

Our goal is to curate content that provides a robust basis for contextual understanding to support practical takeaways for you and your association.  This bi-weekly newsletter is packed to the brim.  We’ve done our best to create meaningful section breaks and incorporate engaging visuals.  When in doubt, Ctrl + F!

N.B.  We pay for subscriptions to access a bunch of valuable content and try our best to share the wealth by providing temporary free access to select articles.  If you find that you do not have access to an article, please consider supporting journalism by subscribing yourself.


💻🔎 SEARCH ALL ISSUES using our Newsletter Database or via the omnibox (upper right corner of your screen). ↗️

Condo Connection on Twitter

Join us on X (Twitter) and Reddit.

Condo Connection on Reddit
Join the Condo Connection Listserv

EVENTS

The 2024 Naughty List

Who has been NAUGHTY this year?


Maryland: Disgruntled homeowner was disappointed that the board members changed over and she no longer had any power mongering influence. So disgruntled homeowner submitted over 20 (I stopped counting) maintenance requests voicing her complaints about the new board and all the issues we were not solving overnight. Oh and did I mention she was on the previous board that left the community in the bad rundown state that she complained about?  The new board answered a few of the complaints and then decided to take it to the community for open meeting peer review. The community was disgusted by the disgruntled homeowner's actions. To the gallows! They said! We gave her the award for having submitted the most complaints in one day and posted it on the public viewable website.  Haven't heard from her since!


Kentucky: Our HOA is still being run illegally.  No annual meeting has been held this year...Denial of records to HOA members and failure to comply with bylaws and KY State laws is the norm for the small board. No transparency or no communication with members about what’s happening.


Washington: The Board and management company lack sufficient understanding of the Washington State Condominium Act and have not provided onboarding training for new Board members. This gap in education and training negatively impacts the community, leading to mistakes and unnecessary rework.

A clear example is the budget ratification process, where owners received three different submissions (!) because the initial versions did not include the required information outlined in the statute.  Such oversights not only waste time and resources but also erode trust within the community.

Proper training and a commitment to compliance are essential for the Board to serve the community effectively. Ensuring adherence to legal requirements will reduce errors, improve efficiency, and maintain the community’s confidence in its leadership.

The 2024 NAUGHTY LIST

Trials and Tribulations of a Volunteer Director


“While we encourage our residents to celebrate the holidays and decorate their homes, the safety of our residents and preservation of our property values are top priorities. Our community’s rules prohibit decorations on the artificial turf and trees between the sidewalk and the curb that are maintained by the association, and any power or extension cords on sidewalks that can pose a trip hazard for our residents, guests, and staff.”

🎥 VIDEO: ‘Humbug’: HOA tells homeowners to take down Christmas decorations — Jason Barry and Akim Powell | AZ Family | December 17, 2024


I've served on the Board of my condo for the last year. It has been the most stressful year of my life since college, mainly because of a specific Board member. It's like she's out of a sitcom: Controlling, doesn't care about the opinions of others, follows the rules that suit her while ignoring the ones that don't, talking about community when all she really cares about is her own power, etc. Every time someone has an idea that differs from what she wants, she would shoot it down without even a discussion. She has our property manager send out messages that weren't approved by the Board, and she hides information about the workings of the building from other Board members, so we can't make informed decisions. And two of the other Board members are pathetic, and always backed her up to avoid conflict, even electing her chair. She is literally the worst person I have ever personally met.

I had been worried about the upcoming election, since she was doing everything she could to suppress ballots and make herself look good (e.g. I have been pushing for open Board meetings all year, and the only one she agreed to was the one soon before the election, which gave her an opportunity to talk about the "progress" the Board has made, even though she fought against every step). I had been doing everything I could to prepare for when she was up for reelection, like meeting with owners, hearing their concerns, educating them about matters in the building, and mentioning what Board meetings are like, but I always worried it was not enough.

But, the election results are in, and she is gone. Owners were able to recognize how awful she is, and decided to vote someone else in instead. The two Board members that always agreed with her are still there, but with me and the two other members that recognized her awfulness, we can now become a voting bloc that stands up for the interest of voters…

The horrible HOA lady is gone, and a new Board is born! — u/VillageSmithyCellar | r/HOA | December 19, 2024


…At around 2:30 p.m., the Clark County Fire Department (CCFD) responded to the condominium fire near east Hacienda Avenue and Maryland Parkway. A total of 10 residential units were affected as a residential fire broke out at the King Richard Court Condominiums.

“I saw flames coming out of the downstairs building and within 30 seconds it jumped to the top,” resident Terry Woods shared with 8 News Now…

Condominium fire in south Las Vegas valley damages 10 units, leaves 2 cats dead — Madison Kimbro and Madina Ansary | 8NewsNow | December 21, 2024

Condominium fire in south Las Vegas valley damages 10 units, leaves 2 cats dead

🎥 VIDEO: Diving into Georgia's Home Owners Association woes — Rebecca Lindstrom | 11 Alive | December 18, 2024


When retirees Becky and James Turner moved into Parkview at Lakeshore six years ago, they hoped they had found their dream: A home they could enjoy in their twilight years, then pass on to one or more of their four children and 11 grandchildren.

It hasn’t turned out that way, and they blame the poor management and escalating fees on the elected board that oversees their private community. Their annual charge has skyrocketed from $2,800 in 2021 to $4,650 this year, forcing the couple — who live on a fixed income — to sell their second car, spend their days triple-checking for the best grocery deals, and make fewer trips to see the grandchildren.

Built in an unincorporated part of Osceola County near Kissimmee in 2005, Parkview is governed as a community development district, or CDD, which under state law is responsible for maintaining the over-500-home community and its amenities with fees paid as part of tax bills. While the higher fees ought to ensure a well-maintained community, the Turners and many of their neighbors say, the playgrounds, the pool and lawns at Parkview have never looked worse..

…HOAs and CDDs are both run by elected community members — but an HOA focuses more on aesthetics while a CDD handles larger projects such as infrastructure. A CDD can also raise funds by issuing bonds and acquire or dispose of real and personal property.

Parkview has both governing structures, but its HOA and CDD are overseen by the same board. The district has $6.3 million in total debt, according to Cruz, which generally has been spent to maintain and improve the neighborhood and its infrastructure…

With fees rising and upkeep lagging, Osceola homeowners blast back at their HOA — Natalia Jaramillo | Orlando Sentinel | December 16, 2024


‘Tis the tipping season. Time to show appreciation for those making our lives better or easier: the hairdresser, the babysitter, the mail carrier.  But in Manhattan’s high-end buildings, there’s another category of helper to reward: the doormen. The Big Apple version of the British beefeater, proud and loyal standard-bearers guarding some of the most expensive real estate in the world…

…Non-New Yorkers might assume our trusty doormen only open doors, hail taxis and accept packages. That’s like saying a nanny just wipes up spilled milk..,

…Unless your guests parachute in, doormen announce each one and handle every delivery, from rib roasts to Rothkos. For the fancy-pants people, elevators open to one massive apartment per floor. With one set of garbage bins per tenant, there’s no doubt who guzzled those empty Grey Goose bottles.

“We must think like engineers, architects, contractors, lawyers, gardeners, plumbers, firefighters, cops and parents, to name a few,” Lenny, a building super on Park Avenue, told me. And the requests never stop…

The Closely Guarded Secrets Of Manhattan Doormen — Holly Peterson | WSJ | December 13, 2024


Required reserve funding is a good thing if it provides current owners ample time to correct for decades of under-funding and deferred maintenance.  This article goes on to ask “who benefits?” from this legislation.  Homeowners certainly benefit in the long-term, but businesses stand to benefit almost immediately due to otherwise unfunded projects suddenly seeing the light of day.

One then asks: are business interests central to required funding?  Experience recommending required funding.

If you live in a condo or planned unit development that has HOA fees, you've probably already gotten the bad news. Your costs are more than likely going up, WAY UP.

I spoke to the manager of a building last month who warned his unit owners to be prepared for a BIG increase in their HOA fees due to a new law signed by Governor Murphy earlier this year…

HOA crisis: Bad news for seniors and condo owners in NJ — Dennis Malloy | 101.5 | December 18, 2024


A former construction boss convicted in a multi-million-dollar scheme to control multiple homeowners associations in Las Vegas had his sentence commuted this week.  Leon Benzer was one of more than 1,500 people who received clemency from President Joe Biden, according to the White House.

The former owner of Silver Lining Construction, Benzer pleaded guilty in 2015 to multiple fraud and tax evasion counts. He was sentenced to over 15 years behind bars and ordered to pay more than $13 million in restitution.  Federal prosecutors said Benzer and an attorney developed a scheme to control HOA boards around the Las Vegas valley…

Man convicted in scheme to control Las Vegas HOAs receives commuted sentence — Matthew Seeman | News 3 LV | December 13, 2024


Tom Skiba, CEO of the Community Associations Institute (CAI), decried "chaos and confusion created by these recent court rulings", yet his own organization filed a lawsuit aimed at exempting condos, co-ops and HOAs – or at least its member community associations – from the CTA.  CAI’s lawsuit at the federal district court level was unsuccessful.

CTA Injunction Stayed, Jan. 1 Deadline Reinstated by Fifth Circuit Court — Katerina Mills, et. al. | The National Law Review | December 23, 2024

Coverage: 1,  2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49 & 50

Energy

It looks easy enough: Ask ChatGPT something, and it responds. But pull back the curtain, and you’ll find that every ChatGPT prompt and Microsoft Copilot task consumes vast resources. Millions of human beings engineering, correcting and training models. Enough terawatt-hours of electricity to power countries. Data center mega­campuses around the world. Power line networks and internet cables. Water, land, metals and minerals. Artificial intelligence needs it all, and it will need more.

Researchers have estimated that a single ChatGPT query requires almost 10 times as much electricity to process as a traditional Google search. Your typical search engine crawls the web for content that’s filed away in a massive index. But the latest AI products rely on what are known as large language models, or LLMs, which are fed billions of words of text—from the collected works of William Shakespeare to the latest forecasts of the Federal Reserve. The models detect patterns and associations and develop billions and billions of so-called parameters that help them mimic human behavior. Using these models, ChatGPT and the like create new content—hence the term generative AI….

AI Wants More Data. More Chips. More Power. More Water. More Everything — Lynn Doan | Bloomberg | December 13, 2024

Total Energy Consumption in Terawatts for Microsoft and Google - Bloomberg

The Cost of Net Zero

$2,000 tax credits for heat pumps from the Inflation Reduction Act might be on the chopping block with a new administration.

…Shuting Pomerleau, director of energy and environmental policy at the American Action Forum, a conservative think tank, is not optimistic about the future of federal heat pump money. " Those incentives, whether they're tax credits or, rebate programs are likely to go away under the upcoming Republican trifecta," Pomerleau says.  

The incoming Republican-led congress will be looking for revenue to pay for tax cuts, says Diana Furchtgott-Roth, director of the center for energy, climate, and environment at the Heritage Foundation, a conservative think tank based in Washington. They will likely get rid of spending programs from Biden's 2022 climate legislation, she says, including the tax credits for heat pumps.

The Trump transition team did not respond to NPR's request for comment…

Want government money for a heat pump? Time might be running out — Julia Simon | NPR | December 25, 2024

Environment


…As cities grow, it’s increasingly important to manage noise levels.  Because so many different things are happening in a city block at once, it’s important to understand how a project will affect its neighborhood and how surrounding noise will impact it…

…Noise pollution can have a huge impact on health and quality of life, causing stress and increasing risk for heart disease and other issues.  But while engineers have more and more tools to address the problem, some cities may need to write and enforce standards so these tools actually get used.

It requires a proactive approach to thinking about how buildings and people exist in harmony with each other and how you make noise and acoustics an integral part of that thinking.

🎥 VIDEO: How an Acoustics Engineer Would Redesign Cities to Eliminate Noise — WSJ | December 09, 2024

Soaring costs for home insurance and property taxes are busting homeowners’ budgets.  Insurers have pushed big rate increases because of losses from natural disasters and rising costs to repair homes. Surging home values in recent years, meanwhile, have lifted property taxes for many homeowners.

These ballooning expenses are rewriting the math of homeownership. In September, 32% of the average single-family mortgage payment went to property taxes and home insurance, the highest rate ever for data going back to 2014, according to Intercontinental Exchange.  The analysis is based on borrowers who use escrow accounts to pay their taxes and insurance as part of their monthly mortgage payments…

Insurance and Taxes Now Cost More Than Mortgages for Many Homeowners — Nicole Friedman | WSJ | December 23, 2024

Insurance and Taxes Now Cost More Than Mortgages for Many Homeowners - WSJ

New York City, New York: Where to buy if you don’t have millions to throw around?

…So where does this leave buyers without a few million in cash to throw down on a dilapidated brownstone? Your best bet is probably to buy a co-op.

Some experts think that the lack of inventory, particularly affordable inventory, may help revive interest in them. Co-ops, while they are a far better deal than condos on a cost-per-square-foot basis, need work more often than not, and a lot of buyers don’t want to deal with that, the boards, or the rules. But for buyers who need a mortgage, co-ops really are the most reasonably priced option, even if some of the more rarefied ones in Manhattan have financing limits and liquidity requirements that mean they’re only a good deal for people who can afford such requirements.

“Co-ops really present an opportunity for buyers out there, especially because affordability is so constrained,” says StreetEasy senior economist Kenny Lee, who adds that he himself picked one up in Jackson Heights a few years back. “We do know that buyers prefer condos, but they cost on average 26 percent more than co-ops of a similar size with similar amenities. With asking prices and mortgage rates expected to stay high, co-ops will become more appealing.”...

Maybe Try For a Co-op in 2025 — Kim Valsey | Curbed | December 23, 2024

___________________


Seattle, Washington: ADUs reign supreme, but are they materially improving housing affordability?

…For years, local lawmakers have touted accessory dwelling units — the technical term for self-contained apartments or houses that are built adjacent to the primary house on a given property, such as the studio Wood built in his backyard — as one way to mitigate the housing shortage. 

“Seattle has a housing crisis, and we have a responsibility to grow the supply of housing options as quickly as possible,” said former Seattle Mayor Jenny Durkan in 2019 after signing municipal legislation that loosened restrictions on the development of accessory dwelling units. Before, there had been vocal opposition among some residents against these types of construction. The Queen Anne Community Council, for instance, had argued that such legislation would accelerate gentrification, undermine neighborhood stability and strain shared resources like parking.

In the five years since, the city has seen a major uptick in interest. In 2020, the number of accessory dwelling units permitted jumped over 68% compared with the year before and continued to rise until peaking last year. In the past five years, close to 4,000 permits have been issued for accessory dwelling units, with over 2,000 for detached units and over 1,800 for attached ones. They comprise more than half of the permits issued for accessory dwelling units in Seattle under the current permitting system, according to data that dates back to 1994. (Not all projects that get permitted end up getting constructed.) …

Priced out of Seattle rental market, more opt for backyard cottages — Jessica Fu | The Seattle Times | December 22, 2024

Issued Permits for ADUs in Seattle - 2005 to 2024 - The Seattle Times

Palm Beach, Florida: Family-priced condominiums?!

…A glamorous new condominium dubbed The Berkeley has broken ground on the shores of West Palm Beach's Clear Lake and although it is coming from the same developer who built the even more glamorous Bristol, this tower is geared toward families because units will be priced between $1.8 million and $4 million.

And this is where I feel like my brain is breaking because those are the cheap units. For families…

Condominium priced for families breaks ground… — Kimberly Miller | The Palm Beach Post | December 24, 2024

Help will soon be available for Colorado homeowners left without options.  Wildfires have caused insurance companies to abandon many customers. Now another option, the "insurer of last resort," is set to launch in 2025.  Colorado's FAIR Plan is a game changer for homeowners like Erik Johnson. For eight years, he and his wife have lived in Coal Creek Canyon where they bought a 50-year-old fixer-upper...

...The plan was built from the ground up by a nine member board that will oversee it. Only those who can provide proof of rejection by at least three insurers will be eligible and coverage will be capped at $750,000. Commercial Coverage will have a cap of $5 million.

In addition to premiums, which are still being determined, the plan will be funded with assessments paid by every insurer in Colorado based on their market share.  Conway said the plan benefits insurers too by spreading out the risk…

…Under a bill to be introduced by state Rep. Kyle Brown of Louisville, a state enterprise would sell catastrophe bonds to investors and the proceeds would help offset the cost of major wildfires…

🎥 VIDEO: Colorado "insurer of last resort" created for homeowners with no other options — Shaun Boyd | CBS | December 13, 2024

___________________


California: Insurers can finally price policies based on a multitude of risk factors.

Landmark regulations intended to encourage insurers to write more policies in risky wildfire neighborhoods through the use of complex computer models were released Friday by the state.

Under new rules intended to stabilize California’s troubled home insurance market, insurers will be able to set rates by drawing on a wide swath of meteorological, geographic and other data in establishing rates, rather than largely relying on historical losses.

The insurance industry argued the change was imperative given global warming’s role in a number of wildfires, including in 2017 and 2018 when thousands of homes burned down. In setting their rates, insurers also must account for efforts to make properties fire resistant…

…The regulations that take effect Jan. 2 arose out of a broad agreement Lara reached with the industry that gave insurers regulatory concessions, including the use of the computer models, in exchange for a commitment by large insurers such as State Farm, Farmers and Allstate to write policies in neighborhoods prone to wildfires equivalent to 85% of their statewide market share. That would mean, for example, an insurer with a 10% share of the state’s homeowners insurance market would have to cover 8.5% of the homes in riskier neighborhoods as identified by the department. No such requirement currently exists.

The changes come as residents living in mountainous and hillside neighborhoods have found insurance harder to come by, forcing them to buy bare-bones policies from the FAIR Plan, the state’s insurer of last resort, which has seen its risk exposure mushroom from $153 billion in 2020 to $458 billion as of September.  The regulations establish a process by which the so-called “catastrophe models,” which are developed by companies such as publicly traded Verisk Analytics, can be reviewed by the state and the public. The department also said it has hired an expert in a newly created position to oversee the process of “examining model integrity and ensuring public review.”...

California issues landmark rules to improve home insurance market — Laurence Darmiento | LA Times | December 13, 2024

___________________


Florida: Property insurance is all about the particulars.

More than two years after landfall, Hurricane Ian property insurance disputes are now hitting the courts and the first to be heard in the state’s hardest-hit county clashed over a point that could be key in damage disputes from this year’s set of storms. 

Is the source of drenching damage the result of wind or water?  It’s an important question because the answer could well determine whether some policyholders get any money at all to fix what nature’s fury flattened or damaged. If a storm surge during a hurricane caused the water damage, typical homeowners’ policies do not cover the cost of repairs. But, if the water came indoors because high winds or a falling tree limb created an opening where the wet stuff entered an abode, then it’s covered…

…Thanks to a change in the law, however, policyholders who disagree with their insurer’s assessment of the damage from this year’s set of storms will encounter stronger headwinds if they try to drag their insurer into court regarding the wind or water question, or any other issue in a settlement dispute.

Finding a lawyer to litigate a property insurance claim has gotten significantly more difficult since 2022 legislation ended the practice of allowing “reasonable attorney fees” to be added to a jury’s monetary award…

Wind or water damage? Ian court cases show what policyholders face in challenging insurers — Anne Geggis | The Palm Beach Post | December 22, 2024

___________________


Japan: Commercial property insurance collusion in response to a deflationary market.

It wasn’t safe to talk about it at the office, or over email. But in a private room in one of Tokyo’s karaoke bars, representatives of Japan’s biggest insurance companies gathered — not to sing, but to coordinate a price hike on a shared corporate client.

It was 2022, and the insurers were reeling from a series of costly natural disasters including heavy rains and typhoons that required billions in payouts and decimated their balance sheets. In a frictionless market, each insurer would have looked at the worsening storms, assessed the growing risk, and raised prices accordingly.  But in deflationary Japan, clients were accustomed to price cuts, not hikes, climate change be damned. It was easier, the salesmen agreed, to cheat...

...In the US and the UK, insurers have overhauled their models and jacked up prices. In some places, they’ve jettisoned thousands of policyholders, enraging politicians and regulators. Japan’s cultural and social pressure effectively prevent insurers from denying coverage they’d otherwise deem too risky, so firms there opted to cooperate to fix prices. In addition to being illegal, it distorted the signal that insurance is supposed to provide to companies, regulators and policymakers....

How Typhoons and Karaoke Crashed Japan’s Insurance Industry — Nao Sano and Aaron Clark | Bloomberg | December 25, 2024

Housing Market

Hopes were high that the Federal Reserve could make homes more affordable by cutting interest rates. So far, mortgage rates are rising instead.  Average 30-year mortgages have climbed to around 6.7% from roughly 6.1% since the Fed started lowering rates in September, according to Freddie Mac. And they are only poised to rise further. That is because mortgage rates move with the yield on the 10-year Treasury, which has surged this week.  Here are six charts showing the forces aligned against potential home buyers at the moment…

The Fed Cut Rates. Mortgage Costs Went Up.? — Sam Goldfarb | WSJ  December 20, 2024

Contrasting Interest Rates and 30yr Mortgage Rates from January 2024 to December 2024 - WSJ
Contrasting 2yr and 10yr US Treasury Yields - WSJ
Mortgage Purchase Applications Index from 2018 through 2024 - WSJ

US home sales are up, but it’s not a rosy picture…

Sales of existing homes rose in November, notching the biggest year-over-year gain in more than three years after a higher supply of homes for sale gave buyers more opportunities.  Still, home-buying activity remains subdued for the second consecutive year. Sales of previously owned homes in 2024 are on track to hit the lowest level since 1995.  Home prices are still near record highs, and while a late-summer drop in mortgage rates helped boost November sales, rates have returned to higher levels. Many would-be buyers are priced out of the market…

…Nationally, there were 1.33 million homes for sale or under contract at the end of November. That was down 2.9% from October but up 17.7% from November 2023, the National Association of Realtors said Thursday…

November Home Sales Post Biggest Annual Gain Since 2021 — Nicole Friedman | WSJ  December 19, 2024

US Median Existing Home Price Changes (YoY) from 2010 to 2024 - WSJ

Zillow “Zestimates” are popular and notoriously error-prone.

…Nowadays, the Zestimate is arguably the most popular — and polarizing — number in real estate. An entire generation of homeowners doesn't know life without the algorithm; some obsessively track its output as they would a stock portfolio or the price of bitcoin. By the time a seller hires a real-estate agent, there's a good chance they've already consulted the digital oracle. For anyone with even a passing interest in the housing market, the Zestimate is a breezy way to take the temperature. Keep tabs on mortgage rates all you want, but they can't tell you that your house has appreciated 20% over the past year, or that your annoying coworker's property is worth more than yours.

Many industry insiders, however, regard the number as a starting point at best and dangerously misguided at worst. Real-estate agents recount arguments with sellers who reject their pricing advice, choosing instead to take the Zestimate as the word of God. One meme likens its disciples to adults who still believe in Santa. Zillow itself lost hundreds of millions of dollars during the pandemic when it relied on its algorithm to buy homes at what turned out to be inflated prices, part of an ill-fated attempt to flip homes at scale.

The Zestimate is just one of a slew of automated valuation models that are increasingly used by banks, investors, and laypeople to estimate the value of homes. No other model, however, has wormed its way into our culture like the Zestimate. The model, like other consumer-facing AVMs, is prone to errors that render it more of an amusement than a serious pricing tool. But while the algo's price-guessing skills may be suspect, it's undeniably elite at one thing: luring people to Zillow-dot-com…

Zillow's Home Price Zestimate Is Distorting the Real-Estate Market — James Rodriguez | Business Insider | December 18, 2024

___________________


Japan: Condominium sales price growth continues to outpace wages.

New condominiums are costing more than 10 times the average annual salary in Japan, according to data released by Tokyo Kantei, a real estate market research firm.  Wages are not keeping up with rising costs and developers are, as a result, focusing on the higher end of the market.  Foreign buyers are also a factor. The weak yen makes property in Japan relatively cheap for some overseas buyers, and their rush into the market pushes up prices.

“The gap between income growth and condominium price increases has widened as housing costs have outpaced wage growth,” said Masayuki Takahashi, a senior researcher at Tokyo Kantei…

…Tokyo Kantei’s study covers the selling price of 70-square-meter manshon — the Japanese word for high-rise condominiums — in 2023. The average price nationwide was ¥45.5 million ($298,000), while the average annual income was ¥4.51 million, for a ratio of 10.09, up from the previous year’s 9.66.  Because of the rising labor, land and raw material costs, even condominiums aimed at general consumers can be pricey, so developers are increasingly shifting their focus to the rich, who are still willing to shoulder these escalating costs, Takahashi added.

…The price-to-income ratio for new condominiums was highest in Tokyo, at 17.78 times, with the average condominium priced at ¥105 million.  Yamaguchi Prefecture had the lowest ratio, at 6.46 times, with an average condo price of ¥29.9 million. Kagawa Prefecture followed, at 6.79 times, and then Yamanashi Prefecture, at 7.43 times…

New Japanese condos now cost 10 times average salary, study shows — Kazuaki Nagata | The Japan Times | December 12, 2024

___________________


The following article suggests that urban living is making a return.  

Americans are moving back to cities. Here’s why. — J.P. Morgan Chase | November 22, 2024

___________________


Seattle, WA: While the article does not mention housing, remote work has taken its toll on condo values across Downtown Seattle.  While King County total assessed value (TAV) trails sales prices by a wide margin, the average, non-weighted TAV change for Downtown condos from 2020 to 2025 is -7.73%.

Seattle, the remote work capital of the U.S., is in denial about its effects — Danny Westneat | Seattle Times | December 21, 2024

Share of Remote Workforce - 20 Major US Cities - The Seattle Times

Manila, Philippines: A “silent fire sale” is happening now.

Buying a condo unit in Manila? There’s a good chance you could get up to 25 per cent discount from developers, especially if you buy cash and haggle right….

…The housing oversupply in the capital Manila has reached 34 months as of November, according to latest data from Leechiu Property Consultants (LPC).  This marks a sharp increase from 29 months recorded in the third quarter.

Roy Golez Jr., LPC’s Research and Consultancy Director, noted that while 4,000 new units were added and sold in the period, 6,000 “backouts” – buyers who did not complete their purchase – caused the surge in inventory.

The surplus has forced property developers to quietly reduce prices on unsold units.  Industry experts describe this as a “silent fire sale,” as significant discounts are being offered to preferred clients, repeat buyers, and bulk purchasers.  Santos Knight Frank Director Lovelle Taleon explained that developers are avoiding public promotions of the aggressive price cuts to prevent "market instability"...

$2.6-billion worth of condo units unsold in Manila: ‘Fire sale’ discounts — Jay Hilotin | Gulf News | December 17, 2024


Metro Manila condo oversupply now equivalent to 34 months — Jon Viktor D. Cabuenas | GMA News Online | December 12, 2024

___________________


Uganda: A housing deficit of 2,400,000 units could be attractive for investors who want to buy and lease condominium units.

Investing in condominiums: Strategic insights, challenges, and opportunities — Monitor | December 09, 2024

Built Environment

Architecture studio ODP Architects has broken ground on the 56-storey Villa Miami skyscraper in Miami, which will be wrapped in an "exoskeleton reminiscent of a faceted diamond" and topped with a helicopter landing pad.

Villa Miami has an approved height of 650 feet (198 metres) and is being constructed in Miami's East Edgewater neighbourhood.

It will contain 70 residences as well as amenities such as a pool deck, spa, member's and yacht club, dock, a ground-floor restaurant and a rooftop helipad…

Miami skyscraper by ODP Architects to be "beacon of opulence and exclusivity" — Ellen Eberhardt | Dezeen | December 12, 2024

___________________


Bemidji, Minnesota: More condos are coming with prices from $303,000 to $575,000 or from roughly $365/sqft to $506/sqft in 4 configurations from 768 to 1,138 sqft.

A year and a half after the  Bixby Condos  were completed on Bemidji's South Shore, another housing development is now in the works.

Slated to open in the spring of 2026, The Walker is a new apartment complex being developed by Jonzek LLC and Mrazek Construction. The project offers a variety of floor plans and amenities, embedding elements of Bemidji's history in the careful naming of each layout…

New condominium development expands South Shore housing in Bemidji — Ashley McKenzie | Bemidji Pioneer | December 11, 2024

___________________


Fujian Province, China: The first condominium-ish.

…The Tianloukeng tulou which captured my fascination is the centre piece of the Yunshuiyao cluster of five, which were inscribed into the Unesco World Heritage Site list in 2008.

As I was shown the dwelling places, the cooking area, the common well, storage areas and other common facilities, it dawned on me that the guarded and gated tulou built by the Hakka clan for community living and mutual protection is indeed the first “condominium” in the world. Such ingenuity…

Awestruck by Hakka 'condominium' in China’s Fujian Province — Hoo Ban Khee | The Star | December 19, 2024

___________________


Georgia: Condominium denied.

Canton City Council Denies Request for 198 Condominium Units — Ethan Johnson | Cherokee Tribune | December 23,  2024

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

Technological Disruption in the US Labor Market | Technological Disruption Paper

— Deming, Ong, and Summers | The Aspen Institute Economic Strategy Group | 10/07/2024

Changes in the Occupation Structure of the US Labor Market from 1880 to 2024 - The Aspen Institute Economic Strategy Group

Global Economy Won’t Feel Much Pain From Trump Agenda in 2025 — Tom Orlik | Bloomberg | December 10, 2024

YOY change in Real GDP Estimates - Bloomberg

How far can US interest rates fall? That depends on inflation of course, but also on the so-called “neutral rate” of interest, which is the rate level that neither boosts nor slows the economy. For years, it was widely considered to be pretty low. Covid scrambled that — and unleashed a high-stakes and highly theoretical disagreement from Wall Street to Washington.

On bond desks, everyone has an opinion on the neutral rate. It’s 3.3%. No, it’s 4.5%. Actually, it’s 2.4%. The problem is that those estimates are all over the place. That means investors have wildly different takes on whether the Fed’s three-month-old easing cycle is just beginning or getting close to the end.

Fed policymakers’ estimates of the long-run interest rate — a proxy for the neutral rate — are divided, too. They’re as low as 2.375% and as high as 3.75% — the widest range since the Fed began publishing the figures over a decade ago. Next week the Fed is widely expected to cut the benchmark rate another quarter point. FOMC members will also update their estimates of the long-run rate. Keep an eye on whether the median estimate increases — and whether the range of opinion is narrowing or expanding.

— Liz Capo McCormick and Ye Xie | Bloomberg Weekend Edition | December 15, 2024

Fed Policymakers' Estimates of the Neutral Rate of Interest - Bloomberg

As a number of Fed watchers anticipated, policymakers also pushed up their forecast for the benchmark rate over the long haul, also known as the neutral rate. The median forecast is now 3%, up from 2.9%. — Chris Anstey | Bloomberg | December 18, 2024

___________________


“With today’s action, we have lowered our policy rate by a full percentage point from its peak and our policy stance is now significantly less restrictive,” Fed Chair Jerome Powell told reporters in a press conference following the Fed’s decision. “We can therefore be more cautious as we consider further adjustments to our policy rate.”

Nonetheless, Powell added that policy was still “meaningfully” restraining economic activity, and the Fed is still “on track to continue to cut.”

To make additional rate cuts, Powell said officials would have to see more progress on inflation, which he said has been moving “sideways.”

Fed Lowers Rates by Quarter Point, Signals Two Cuts for 2025 — Amara Omeokwe | Bloomberg | December 18, 2024

___________________


The Fed delivered the expected quarter-point cut, bringing the year’s total reductions to 100 basis points. This completes the Fed’s policy recalibration, and the US central bank will move more carefully going forward, Powell said. In a surprising move, Cleveland Fed President Beth Hammack, who only joined the FOMC this year, dissented in favor of holding rates steady. It was the first dissent by a regional president since 2022 and is an indication of a more bifurcated committee as the bank makes less progress than forecast on cooling inflation.

The big surprise came from the Fed’s projections for policy going forward. While economists had forecast a slowdown next year, policymakers penciled in just two cuts (three is what most people expected) for 2025 and they don’t see inflation returning to the 2% target until 2027 (it was 2026 previously).

In the press conference, Powell said the Fed will now cut rates when it sees further progress on inflation. He declined to lay out a more precise path for cuts in 2025, saying that it depends on how the economy evolves.

The incoming Trump administration has clearly shifted expectations for next year. Powell said that some Fed officials have started incorporating potential new policies into their forecasts, but the exact policies that will come, and their impact on the economy, remain highly uncertain. Another factor that may ultimately keep interest rates higher than previously thought is the idea that the neutral rate of interest has moved up recently. Fed officials again revised upward their estimate of that.

Stocks headed for their worst Fed decision day since at least January, when policymakers had warned it wouldn’t be appropriate to cut rates until they had greater confidence inflation was headed to 2%... — Catarina Saraiva | Fed Reporter

Compare market expectations to the actual FOMC policy / fed funds effective rate over the last 24 years.

Never ever make predictions — Robin Wigglesworth | Financial Times | December 18, 2024

Market expectations compared to the actual FOMC policy / fed funds effective rate over the last 24 years - Financial Times

Long-term yields are impacted materially by the massive US national deficit.

…Indeed, the outgoing Biden administration forecasts that 2025 will see a third straight year of deficits in excess of 6% of GDP — unprecedented at a time of solid economic growth and high employment…

A jump in US yields would spell another year of frustration and misery for investors in Treasuries. Since 2022's calamitous -12% year, they returned just 4.1% last year and a paltry 1.2% year-to-date…

Bessent Looks Set to Face Restive Bond Investors in 2025 — Simon Kennedy | Bloomberg | December 17, 2024

___________________


Ignoring warnings from budget experts, Washington has for years set fiscal discipline aside for another time, enacting spending and tax packages that added to government red ink. Emergency programs to combat the Covid pandemic, along with steady growth in healthcare and retirement-benefit spending and rising interest costs, piled onto the debt burden. The outgoing Biden administration forecast that 2025 will see a third straight year of deficits in excess of 6% of gross domestic product — unprecedented at a time of solid economic growth and high employment.

“Ultimately, the deficit has grown so big that it requires very drastic and unpopular reforms to bring it down — at a time when Congress seems even less willing to stop playing Santa Claus,” said Brian Riedl, a senior fellow at the Manhattan Institute and former Republican staff member at the Senate Finance Committee. It’s “simply too big to grow out of and it's too big to tweak your way out of by addressing small parts of the budget.”...

Debt Risks That Lured Bessent to US Treasury Now Loom Large — Liz Capo McCormick and Viktoria Dendrinou | Bloomberg | December 16, 2024

The Big Take — Bloomberg

US 10 Year Treasury Yield from 1998 to 2024 - Bloomberg

…From Morgan Stanley to JPMorgan Chase, roughly a half dozen sell-side strategists, are now forecasting the world’s reserve currency will peak as early as mid next year before starting to decline, with Societe Generale seeing the ICE US Dollar Index falling 6% at the end of next year.

The dollar has already soared this year, on track for the biggest rally since 2015, thanks to Trump’s victory in the US presidential election and as strong economic data prompted traders to reduce their forecasts for the number of Fed rate cuts next year.

The greenback’s strength has been “stomach churning,” said Kit Juckes, the head of currency strategy at Societe Generale. “We’re driving the price of an asset up to something that is not sustainable over the long-term.”...

Dollar’s Trump-Fueled Gains Face a Reality Check Late Next Year — Carter Johnson, George Lei and Anya Andrianova | Bloomberg | December 16, 2024

Short-term yields are forecast to decline.

…Strategists at major banks envisage short-term US Treasury yields dropping over the year, despite the risk President-elect Donald Trump’s trade and tax policies play havoc with such predictions by reigniting inflation.

Market-watchers are readying for a drop in the two-year Treasury note’s yield, which is more sensitive to the Fed’s interest-rate policy. They see a decline of at least half a percentage point from the current level 12 months from now….

— Simon Kennedy | Bloomberg Markets Daily | December 24, 2024

US Treasury Short-Term Yield Predictions - Bloomberg

Cashing In

U.S. stocks have been euphoric lately—and they’ve left international stocks in the dust.  The longtime performance gap between the two is widening. Since the end of 2009, an MSCI index tracking equities outside the U.S. has only topped the S&P 500 in two years, according to Dow Jones Market Data. During the S&P 500’s banner 26% rise this year, the index has risen roughly 3%. If that holds through the rest of the year, it would be the biggest performance gap in nearly three decades.

Investors are now in a bind: Hold on to something that keeps falling behind, or sell it when it’s potentially at a low point? Investing history suggests that stock-market dogs bounce back eventually.   Millions of American investors are likely facing that dilemma, particularly as a new Trump administration gets set to change the U.S.’s relationship with the world. If you have a target-date retirement fund, foreign stocks make up nearly a quarter of it on average, according to Morningstar Direct. The share has held pretty constant over the past few years…

A Quarter of Your Retirement Fund Just Isn’t Keeping Up — Ben Eisen | WSJ | November 28, 2024

Remember the US commercial real estate crisis? It’s possible it slipped your mind these past few months given the presidential campaign, the election and its aftermath—both since Nov. 5 and that yet to come. But don’t worry, it’s still here.

The funny thing is that, back in 2022 when rising interest rates turned the sector into a credit desert, optimists told everyone to just hang on until 2025—by then, inflation would be whipped, money would be cheaper and demand would tilt in their favor. Well, 2025 is almost here and the landscape that awaits isn’t so much green trees and rainbows as a densely-packed minefield, one filled with losses that can no longer be put off. “I look at 2025 as a year of reckoning,” says Tim Mooney, head of real estate at Värde Partners. “Lenders and borrowers will acknowledge that lower interest rates aren’t going to save them.”

— David Rovella | Bloomberg Evening Briefing | December 18, 2024

Are you fascinated by case law?  Maybe you should be?

Discover our Case Law page!

Case Law Page

Should Your Condominium Association Have A Maintenance Matrix? — Michael Pereira | MI Condo Law | December 12, 2024


The owner of the Lake House at Martin’s Landing is suing more than a dozen homeowners association board directors over how they allegedly conducted a vote on a $1.1 million special assessment.

The assessment, for renovations to the 50-year-old neighborhood pool, will charge nearly $600 to each of the community’s some 1,900 homeowners, according to documents provided to Appen Media.

Critics of the proposed project say it poses an environmental issue, as the pool lies just a few feet away from the Chattahoochee River. They also urge the importance of staying privy to association dealings within your neighborhood.

The Nov. 1 filing to the Fulton County Superior Court alleges board directors, as well as the property manager, “aimed to mislead and to ensure their favored outcome on what was supposed to be a community association vote by members.”...

Suit against Martin’s Landing directors alleges misconduct in $1.1 million vote — Amber Perry | Appenmedia | December 20, 2024


Whether condominium associations can impose such fees against only selling unit owners but not all unit owners for the purpose of building up cash reserves to defray future common expenses is previously untested in Massachusetts…

The judge observed that if evidence in the case proves that the condominium association intended to use the resale fees to defray future common expenses as the unit sellers allege, such a purpose would violate the Massachusetts Condominium Act “because it is, in practice, a one-time additional payment for ‘common expenses’ that is assessed not against all unit owners but only against those who sell their units.”

The judge’s ruling potentially impacts other Massachusetts condominium associations who have imposed similar “transfer fees” upon the sale of condominium units designed to build up reserves instead of simply defraying costs associated with the transfers.

The putative class of former condominium unit owners were forced to pay a “resale fee” equal to six months of condominium dues as a condition of the sale of their units.  The two named plaintiffs had to pay $30,000 and $10,000, respectively, and it is believed dozens of other former unit owners were forced to make similar payments over last decade…

Judge allows putative class action to proceed against condo association for imposing ‘resale fees’...

— Todd & Weld | December 2024


Judge rules class action can proceed over condo ‘resale fee’ — Massachusetts Lawyers Weekly

Alves, et al. v. Clarendon Condominium Trust, et al., Lawyers Weekly No. 09-135-24


Can HOA board bundle proposals for a vote and, if it fails, revote with old proxies? — Ryan Poliakoff | The Palm Beach Post | December 15, 2024


Condo by-law authorizing Santa Claus to land on common elements — Rod Escayola | Condo Adviser | December 18, 2024

We featured good things coming to Washington State in our last Issue #105And now CAI is hosting a “WUCIOA Association Next Steps” webinar in early January presented by attorney Marlyn Hawkins.  Marlyn is the attorney who argued, unsuccessfully, that “industry standards” prevail over state law (see You Can’t Make This Stuff Up from Issue# 90).  Marlyn’s seemingly anti-owner approach has been a sore point for owners at other condominiums as well.  Perhaps you should make this a seminar to avoid.

That said, your association should start preparing NOW, well before January 2028.  Skip the seminar and head to WUCIOA.info for free, 24/7 access to learn about next steps.

CAI’s seminar mailer (excerpt at bottom) is a bit of a disingenuous temper tantrum:

“…A great deal of thought and planning has gone into the physical design of these private communities, but for many years little effort went into determining the best way to govern them, or how their private governments should be integrated into the overall system of public local governance…” — Evan McKenzie, 2016 🔗

Enacting state law absent the balance of conversations addressing the reasonable needs and expectations of homeowners who are ultimately responsible for all governance and operation of their communities makes little sense, but has been the reality of decades of legislative history.  Statutory bias is often difficult to discern for the uninitiated, but becomes clear as one studies who, what, when, how and why laws have evolved – or not – over time.   Reforms that replace relative terms like “reasonable” with absolute definitions and fixed timelines are silently dismissed in favor of broad language that can be interpreted to suit a reader’s favored position.  Interpretation leads to misunderstandings, disputes, frustration and legal fees!

Annual statutory updates compound the challenge of informing the community association ecosystem (especially board members, community managers, management companies and attorneys) which is already complex given the nature of governing documents, the decision-making apparatus (time, lack of expertise, etc.), and, for smaller associations, fiscal bandwidth.  Even medium to large associations with ample fiscal resources are unlikely to regularly amend or restate their governing documents.  Woefully outdated information foments misunderstandings, disputes, frustration and legal fees!

State statutory reforms will continue until balance has been restored between the reasonable needs and expectations of homeowners and the power of condos, co-ops and HOAs.  Frustratingly, despite statements and public policies to the contrary, CAI’s business advocacy remains on course to delay, deny and dilute statutory reforms adopted in states such as California, Florida and Nevada up to and including legislation its own LAC attorneys in those states have drafted and sponsored.  Concepts such as alternative dispute resolution (ADR) and mandatory reserve funding are desperately needed, yet remain on the radar instead of the drafting table primarily because the business industry is saying one thing and doing another.

“Adapting” to new laws is a misnomer.  Associations – and all businesses and individuals – must follow the law or potentially face the consequences.  Conceptualizing legal requirements as “positive” and “negative” is an incorrect frame of reference that leads directors, managers and even some attorneys to take unnecessary risks instead of following the plain language of the law.  Laws are neither "fragile" nor in need of corporate "minders" to ensure they stay intact.  While sometimes tedious and plodding, laws are also pliable.


CAI MAILER: BECOMING A WUCIOA COMMUNITY

What does it mean to “become” a WUCIOA community? Well, as you have probably heard, the Washington Uniform Common Interest Ownership Act or “WUCIOA” (pronounced woo-kai-oh-uh) is the statute that was studied and tinkered with for years by industry leaders prior to its enactment in 2018. Originally only intended to apply to new community developments, in 2023, the legislature enacted a bill referred to as “WUCIOA for All” that did two things: First, it stated that all preexisting condos and HOAs (including Old Act condos, “new act” condos and all HOAs) would be governed by WUCIOA as of January 1, 2028.

Second, despite the fragile balance struck by the committee that studied and tinkered with WUCIOA for years prior to its enactment in 2018, the statute was significantly revised to change many of the concepts that community association attorneys, managers, and directors have come to learn over the years. Thus, even existing WUCIOA communities may want to consider amending their governing documents to comply with the new changes.

Converting to WUCIOA is a big deal!  Whether you’re an “Old Act” condo, pre-2018 condo or an HOA, there are a lot of changes in store for your community if it decides to “opt in” to the statute prior to the mandatory date of January 1, 2028. As experienced community association counsel and member of the WUCIOA drafting committee, attorney Marlyn Hawkins will provide attendees with information on how to opt in, the potential legal issues related to opting in, and concrete examples of some of the more significant changes between WUCIOA communities and the old regimes. Some of the differences will benefit many communities, while others may not, but both the positives and the negatives will take a significant amount of time to get used to…

+++ Have a question that you'd like to ask directly to your peers?  Ask YOUR listserv! +++

Homeowners | Volunteer Leaders | Managers & Management Companies | Vendors