If your condominium dues went up last year, it’s par for the course. Nationwide, they increased more than 5 percent, and the money was spent on rising costs and reserve contributions.
But if you live in a high-rise, your expenses might have gone down a tad.
These and other financial trends are reported in just-published “2007 Expense Analysis: Condominiums, Cooperatives and Planned Unit Developments” by the Institute of Real Estate Management. The survey, conducted annually since 1978, tracks the income and expenses of 1,500 properties across the country and makes one-year comparisons.
The survey’s findings are expressed in median percentages, meaning that half the responses were higher and half were lower, explained IREM’s vice president of legislation and research Chuck Achilles.
“We feel that the middle is a better way to judge where you are than averages,” he said. “One or two really high numbers could send an average up.”
Among the highlights:
– Condominium owners overall paid 5.2 percent more in assessments in 2006 than they did in 2005.
– When broken out by architectural type, low-rise properties increased assessments 4.6 percent, to $192 monthly, and townhome properties increased assessments 4.7 percent to $164 monthly.
– High-rise assessments decreased 3.6 percent, although they are the highest at $356 per month.
“Assessments for high-rises are always more,” said Achilles. “One reason is the elevator, which is one of the most expensive components you can have. They’ve usually got an onsite manager and a maintenance staff, and if they are in a highly congested area of the city, their parking lots get more wear and tear than if you’re parking on the street. All those things cost a lot of money to maintain.”
On the spending side of the equation, operating expenses for all condominiums rose 5.5 percent. High-rises reported a 4.9 percent decrease in operating expenses, while low-rise costs went up 7 percent and townhome costs rose 1.7 percent.
Repair and maintenance, which historically account for the biggest portion of an association’s budget, declined 3 percent. But fixed expenses, such as utilities and insurance, jumped 14.8 percent.
Contributions to reserve accounts, which are funds earmarked for future capital projects, came in at 17.6 percent of the budget total. High-rises kicked in less, 15.5 percent, and townhouses set aside more, 20.4 percent.
Over the past few years, associations have been setting aside greater amounts for their reserves, said Achilles.
“But the question is, is that adequate?” he said. “Generally speaking, it’s probably not. That’s why so many associations usually have to ask for special assessments in addition to their monthly assessments and replacement reserves.”
The survey also queries respondents about the amenities and utilities they provide to their residents. Among the condominiums, 65 percent provide water and 58 percent have a swimming pool. Forty percent have garage parking spaces and 31 percent have recreational buildings. Seven percent have a sauna.
“When buying a condo, you have to look at what is included in the assessments, not only the median data,” said Achilles. “If it’s an older building, you may have heat included because the building has central heat. Or water might be included because there’s only one meter. The assessment might be higher than the median data, but only four percent provide heating fuel.”
The responding properties vary in value and age. Market prices range from under $60,000 (5 percent) to more than $200,000 (44 percent). More than 80 percent were built within the past 30 years.
To order a copy of the 246-page Expense Analysis: Cooperatives, Condominiums and Planned Unit Developments, call IREM at 800-837-0706, ext. 4650, or log onto irem.org. The cost is $173.95 for members and $346.95 for nonmembers. Shipping and sales tax are additional.
SEMINAR: An educational opportunity for association residents and volunteers will be offered in the upcoming week. The Illinois Chapter of the Community Associations Institute is presenting “12 Mistakes Boards Make,” a seminar about the major mistakes made by condo boards. The event is scheduled for 7 p.m. Tuesday at the Wingate Inn, 600 Milwaukee Ave., Prospect Heights. $35 for members and $45 for non-members. Call 630-307-0659 for reservations. (This paragraph as published has been corrected in this text.)
