Many condominium owners are in for a nasty surprise when new condo fees are announced.
Zillow reports that the national monthly median condo fee increased 19 percent between August 2020 and August 2021. While similar data is unavailable in Canada, our higher rate of inflation suggests that condo fees in Toronto have or will increase even more. Many owners are likely to be paying in excess of $1,000 more annually.
Fees are used to pay for the upkeep of common elements, utilities, taxes, personnel, and other costs which have all risen more than the official rate of inflation. This impacts on the rising cost of energy, management services, contracts, wage increases, and unforeseen expenses related to COVID. The cost of landscaping, plumbing, and construction in general have all increased because of labour and supply shortages, requiring vendors to increase prices. Inflation has further increased all costs.
Another factor in rising costs is the Champlain Towers South building collapse in Florida. Communities that have delayed major repairs or maintenance recognize the risks in doing so and may now be addressing long overdue concerns. Climate change in the form of more severe storms, greater precipitation and faster deterioration because of sun and heat further impact on necessary building maintenance and repairs.
The pandemic has resulted in many spending more time at home. They cause more wear in the building while relying on more electricity, along with faster and reliable internet, to power electronics for recreation, exercise and employment. The cost of maintaining the home has further increased because of heavier individual use. Virtually all common areas and amenities are being more heavily used.
Higher insurance costs, another consideration, are reflective of the growing cost to maintain the high-rise home. Some areas contend with wildfires, more frequent and severe hurricanes, tornadoes, wind storms or other catastrophic weather events. Rising water levels, pollution and deferred maintenance round out the many reasons why insurance costs are also on the rise. Communities that keep condo fees too low for too long find they eventually need to pay these building maintenance costs in addition to higher insurance costs.
The risks of insuring high-rise buildings are so great that more insurance companies are refusing to continue doing so.
Regardless of the age or physical state of your community, you can anticipate a higher-than-average increase in condo fees.