2023 State of the Industry Sneak Peek

Welcome to your First Look.

As one of the few members of the community association management industry to be offered this sneak peek, we thank you for taking the time to review a first glimpse into our findings. We hope you take the next few minutes to recognize the transformative results of our 2023 State of the Industry Report. The results this year are, frankly, hard to absorb at times. But we truly believe that those who take the time to review the results and apply necessary changes to their business will reap the rewards. Let us know what you think at marketing@cincsystems.com, and be on the lookout for the full report on January 31st. 

Summary of Key Findings

  • It’s All About the Manager. Board satisfaction with their management company is tremendously reliant on the quality of the Community Manager assigned to their property. But as manager burnout is a top concern amongst board members, they are clearly not seeing enough of their manager on site, nor are they receiving enough communication. But does this mean executives need to reevaluate their management team, or the tools that they provide to their management team?
  • Boards Aren’t Happy.  While other studies show relative satisfaction towards management companies, our report shows an overall dissatisfaction. This is also made clear with the level of client churn management companies are experiencing. If management companies lose just as many clients as they gain year-to-year, is growth even possible?
  • A Lack of Education is Cause for Concern. There is a clear need to provide board members more education to properly make effective change within their community. Volunteer board members don’t feel properly equipped to support their communities, and it’s causing a lack of engagement and increased client frustration. Management companies who provide sufficient homeowner and board education will reap the rewards.
  • Reserves are Running Low. Both management companies and community associations are concerned with reserves funding, and many communities have failed to reevaluate their reserves. This inaction can lead to dire consequences, especially in a time where costs continue to rise. 
  • Investments Aren’t Adding Up. Management executives are focused on portfolio growth and profitability and plan to invest in their management staff in order to grow. But based on what we hear from the managers themselves, they aren’t planning to invest in the right areas of the business. If there’s misalignment between what executives are providing to managers and what managers actually want from their executives, what will happen to a company’s bottom line?

Industry Pulse: What's With the Misalignment?

The first question that we asked all respondents for our State of the Industry Report was, What do you believe are the largest threats facing all community associations today? We ranked the results with 10 being the highest ranking threat and 1 being the lowest ranking threat. The below stats showcase the weighted average of total responses.

While last year’s report showed similar results across board members, community managers and management company executives, we didn’t have the same findings in 2023. Board members are more concerned with homeowner apathy and manager burnout, while managers and executives are more concerned with reserves funding and deferred maintenance.

In addition to homeowner apathy being an overwhelming concern, underfunded reserves came in as a close second, followed by deferred maintenance. These concerns surrounding aging infrastructure have been top of mind since the Surfside Condo collapse in 2021 and the subsequent legislation that followed. It’s interesting to note that management company executives and community managers prioritized underfunded reserves over homeowner apathy, unlike their counterparts. 

The next threat noted by respondents related to board and staff burnout. Interestingly, this concern was ranked higher by board members and community managers than management company executives. Overwhelmed community managers and undereducated board members may be contributing to stunted growth opportunities across the industry. 

Delinquency, which directly impacts a community’s budget, is a growing concern. Many respondents questioned the ability for their homeowners to continue making thoughtful and timely payments during a pending recession.

Investment homes owned by outside investors (foreign or domestic) for use as short term rentals remain a top concern in 2023 as it did in 2022. For an industry in which homeowner apathy is critical to community improvement, it’s important for communities to have residents living and working within the actual place of residence. 

Finally, while legislation, lack of modern technology, and natural disasters were ranked low in concern, these categories easily feed into issues pertaining to homeowner apathy, aging infrastructure, and staffing issues. 

board members
Management execs
community managers

Notable Responses

We asked our respondents if there were any emerging concerns we may have not considered in the categories we had listed. The responses we received were quite unfiltered, and at some points, disturbing. Trending topics include:

  • Violence and Safety Concerns. There were an overwhelming number of concerns related to criminal activities, violence, and homeowner hostility. While an increase in aggressive behavior has been a growing concern since post-pandemic anxieties ensued, the numerous responses relating to actual crime and even shootings were alarming. While we do not have sufficient data to know if these concerns are real or perceived, nor do we necessarily have the expertise to discuss such sensitive topics, we do take note in this feeling within the communities serviced by associations and will continue to research.
  • Qualification and Education. Many respondents expressed concern over the level of education received by board members. By not understanding the basics behind running an association, as well as emerging legislation, managers and boards aren’t able to properly service and engage their communities. Many respondents also noted that because their management companies have been growing so quickly during a tight labor market, they’ve been unable to hire properly qualified management staff to accommodate their communities.
  • Perception. The negative perception associated with homeowners associations impacts overall homeowner apathy. As one respondent noted, To most Americans, anything and everything to do with an HOA is a negative.  Education is needed to make people in general understand that local governments are forcing communities into a quasi-municipal position with responsibilities and obligations similar to those of cities and counties in many cases.”

What Do Board Members Really Want?

While other research outlets show that boards are satisfied with their management companies, our Report will show the opposite. Here’s an example: communication between the association and the management company is a long-time concern within the industry. It should come as no surprise that board members would benefit from more communication with their management companies. The question, however, is how one should communicate. We asked board members to select which communication channels are utilized by their management companies and what they’d prefer. Overall they would prefer more communication from every channel other than email, especially when it comes to SMS texting and their web portals. 

communication preference

The Labor Market

recruit and retain
tight labor market

Knowing that qualified managers are becoming harder and harder to find, we wanted to understand what management executives are doing to handle the tight labor market and better support their employees. When it comes to recruitment and retention, 16% of executives surveyed have increased management salaries. Other popular initiatives to recruit and retain talent include covering certification expenses, offering remote work flexibility, and improving benefit offerings. 

It doesn’t seem that the tactics applied are working. When we asked how companies are handling the tight labor market, 34 percent of respondents stated that they’re still struggling to find talent – this includes respondents who increased management salaries, showing that this strategy doesn’t work. 

So our industry faces a conundrum. Costs are at an all-time high and a pending recession is sparking anxiety among business owners nationwide, yet the labor market is still tight and owners are still struggling to find quality talent. Increased salaries, certification opportunities, and healthcare benefits are all great considerations. But more needs to happen to bring better talent to community association management.

The Community Manager

One thing that you’ll find in our State of the Industry Report  is a comprehensive understanding of what community managers need from their executives, according to them. 

When asked about their skillset, community managers note that communication and face-to-face engagement are their strongest skillset. Board consultation and vendor management follow next, with skills pertaining to project administration and general property upkeep (inspections, reporting, and event coordination) as their lowest skillsets. 

Now, one may be wondering what managers want most from their leaders to grow in their career and support their company’s bottom line. Is it salary? Is it certification? Spoiler Alert: It’s neither, and we don’t think anyone will guess the right answer.

The 2023 State of the Industry Report Will Be Released on January 31st, 2023.

If any of this information has you questioning processes you may have put in place, we welcome you to come back on January 31st for the full insights into our Report. The State of the Industry Report will be released following our keynote chat with John Amaechi, organizational psychologist and Founder of APS Intelligence. Register Here to hear from John and get access to our Report ASAP. 

State of the Industry

Download Your Copy of the State of the Industry Report

Download our report for your records and to share with your colleagues in the industry.

Cinc Systems