Thursday, February 14, 2008

Minneapolis condominium votes to ban smoking

If you're not a smoker, smoke stinks and is offensive.

This apparently why 77% of members of a Minneapolis high-rise condominium voted to ban smoking by new owners. Current owners who smoke won't be affected by the ban, which is getting national attention.

Wednesday, February 13, 2008

Home sellers see prices 20% below their purchase prices

Bloomberg reports on potential home buyers who are finding that their homes are worth as much as 20% less than they paid for them three years ago.

The boards of condominium and townhouse home owners associations undoubtedly will have foreclosures in their communities. This will drive down values of homes in those HOAs until those homes are sold.

Meanwhile, the HOAs will need to make sure that the banks that foreclose on homes keep them up and maintained.

Consult your attorneys now.

Housing and recessions

The housing industry's depression may play a role in creating a national or even world wide recession, and this might be a good time to review the history of housing depressions and general recessions. John H. Makin's essay is an interesting read.

Economists debate 'housing bubble'

The housing market clearly is correcting the housing bubble of the last 10 years, but over at Marginal Revolution, economists are debating whether there was a bubble.

Many economists are looking for housing prices to drop another 15% to 20% and probably more for condominiums and townhouses.

Tuesday, January 16, 2007

Condominium markets collapse in major cities

The NY Times reports that demand for condos has collapsed under soaring inventories in Boston, Las Vegas and Washington, DC, but remains firm in New York City, but even there, prices are down 5%.

This is a natural reaction to years of soaring prices, and it was to be expected regardless of interest rates or the strength of the economy or stock market. A correction was inevitable, and the actions of home builders suggest that it's far from over.

Tuesday, November 28, 2006

Hands on condo and townhouse HOA boards save money

When members of condo and townhouse home owners associations take charge of hiring and managing contractors, they spend their own money, and they get more for their money than boards that let management companies spend their money for them.

Long ago, the late, great economist, Milton Friedman, noted that when politiciians or anyone else spends your money for you, you will get less than desired results. "That's government."

Monday, October 30, 2006

How to choose a bank for condo and townhouse HOAs

Most condo and townhouse home owners associations use banks recommended by their management companies, but a fair share no doubt search the market for banks that will give them the best returns on their reserves and good deals on loans.

An HOA's banking needs are relatively simple.

You need a checking account that allows online banking, produces useful monthlly statements and provides access to the certificate of deposit and Treasury bill markets.

HOAs don't speculate in the stock or bond markets with their reserves or other excess cash.

The jobs of HOA directors is to preserve assets, not to grow them.

Thus, it makes pretty much sense to use the bank that an HOA's management company knows and uses so long as there are no conflicts of interest between the bank and the management company or members of the board of directors and basic banking needs are met.

Many HOAs, however, need loans to finance major maintenance and repair projects when their reserves are too low. Some banks specialize in lending to HOAs, and they should be considered by HOA boards.

Why do you need a bank that specializes in lending to HOAs?

The simple answer is that HOAs are run by volunteer boards who need special services and attention when it comes to lending to them. And the assets that HOAs put up as collateral are different than the assets and cash flow statements offered by other borrowers.

Some banks make it a point of being comfortable with lending to condo and townhouse HOAs, and some don't.

Thursday, October 26, 2006

Snows challenge condo and townhouse HOA boards

Snow removal policies are always a challenge for condo and townhouse (patio home) HOA boards.

At what point do the sidewalks and driveways get shoveled and plowed. Some common issues include:

1. Does the HOA clear driveways as well as sidewalks?
2. Clear snow before it stops falling, regardless of depth?
3. Clear snown at 1", 2" or 3"?
4. Who calls for snow removal, or does the contractor come when he thinks it's appropriate?
5. Who decides that snow is heavy enough to bring in additional, expensive workers and equipment?

Wednesday, October 18, 2006

Condos hardest hit in weakest housing markets

Three real estate economists say condo prices are falling the most quickly, and by "condos," they probably also mean townhouses, if not patio homes.

Anyone trying to track the housing market will be interested in the's Econoblog round table discussion.