Inventory of condo, HOA developments predicted to grow in 2022
By Spencer Lee | January 25, 2022, 6:11 p.m. EST
New condominium and homeowners' association developments are predicted to grow by another 5,000 this year, according to early data from the Foundation for Community Association Research.
The number of U.S. community associations, which includes homeowners associations, condominiums and co-ops, totaled approximately 355,000 in 2020, the last full year of data available. Units in these planned communities were home to 74.1 million residents and accounted for 27.5% of U.S. housing stock. The foundation, an affiliate of the Community Associations Institute, estimated that the number of communities grew to between 356,000 and 358,000 by the end of 2021. By comparison, totals increased by 4,000 each year in 2019 and 2020.
Within the 2021 total, homeowners' associations accounted for a 58 to 63% share, condominiums made up 35 to 40%, and cooperatives took the remaining 2 to 4%, according to the foundation.
While a spike in overall numbers is projected for 2022, the percentage of homes in community associations is estimated to fall between 25% and 27% relative to total housing stock, after a two-year period marked by record home-buying demand and new housing starts.
Current trends among younger consumers “seeking noncommittal housing options” are having an effect on the current pace of growth, according to Dawn Bauman, executive director of the foundation and Community Association Insitute’s senior vice president of government and public affairs. “This trend is incentivizing developers to choose apartment development over condominium development,” she said in a press release.
Reflective of the trend, multifamily starts, which includes construction of apartment and condominium buildings, unexpectedly rose at its quickest pace since early 2020 in December, according to the U.S. Census Bureau.
But recent research also suggests that Generation Z consumers are more interested in owning property than millennials and are also more open to life in the suburbs, promising trends for both homebuilders and community associations alike. The 2020 U.S. census indicated that 65% of new single-family homes had been built in a homeowner community.
“Community association housing experts are optimistic about the new home construction predictions, while closely examining how homeownership preferences and the persistent supply chain and labor shortages could disrupt growth,” added Bauman.
According to the foundation’s data, the value of homes located in community associations is estimated at $9.2 trillion, a figure that might appeal to Generation Z, who sees homeownership as a wealth-building investment as well.
Sun Belt states lead the U.S., both in the number of community associations and residents within them. California, the most populated state, had over 14 million people dwelling in 49,520 condos, homeowners' associations or co-ops in 2020. Florida had the second highest numbers, with 9.7 million residents spread across 48,940 associations. Texas rounded out the top three with 6.1 million people living in 21,470 communities.
Spencer Lee Reporter, National Mortgage News