How Inflation Could Affect the Value of Your Coop or Condo
Another case for reducing carbon
Inflation is a problem that has been affecting us all in virtually all aspects of our lives, and coops and condos are certainly no different and not in any way immune. The costs of goods and services needed to operate and maintain apartment buildings have been steadily rising; the latest official government number pegs inflation at 9.1%. Were inflation to be measured by the same parameters as in the late ‘70’s (the last time we had such elevated inflation numbers), the rate would be nearly double that. Some sectors in the coop/condo space are experiencing increases as high as 20 percent. Coop and condo associations are struggling to keep up with these rising expenses, just as individual households are.
Although property taxes and wages which typically account for 75% of a coop building's operating budget have been steadily increasing, the balance has been increasing at a higher clip than in recent years. The areas with the highest inflationary pressure have been insurance, energy, and repair and maintenance.
Over the last year, many have seen their insurance premiums increasing in double-digits. One coop board called us because their insurance premium doubled! We are proud to have been able to keep the premium escalation for our coop and condo clients in the single digits.
Energy prices have pretty much doubled in just the last year and a half. As seen at the pump, in the news, and on our electrical bills, there appears to be no end in sight. With the upcoming fines that buildings are facing as part of Local Law 97, the increase in the cost of energy makes reducing energy use even more urgent. Local Law 97 Fines will start in 2024 and increase in 2030 when 80% of New York City buildings will fine fines in the hundreds of dollars per year for not meeting the city’s carbon output goals.
One way to offset the effects of inflation is to pass along the costs to owners through hikes in maintenance or common charges. We often hear that property managers are of the opinion that increasing the maintenance or common charges every year, whether needed or not, is good practice. In our opinion, that's easy for them to say, it's not their money! Property managers have instilled this in many coop and condo boards who are of the same opinion. However, this is not always desirable.
Another option is to cut costs wherever possible without compromising the safety or quality of life for residents. This can be a challenge, but it is possible to find ways to save money without sacrificing the things that make your property a desirable place to live. If you are struggling to keep up with inflationary costs at your property, consider speaking to a coop or condo consultant. They can help you assess your options and develop a plan to keep your property running smoothly—without breaking the bank.
The Folson Group are energy efficiency consultants who optimize ways to reduce the amount of energy the building is using, making your building greener and more sustainable. From planning to execution and completion, their customers have reduced the cost of energy by up to 40% on the cost of your project.
Email us at info@thefolsongroup.com or call us at (917) 648-8151 to find out more.