The Russian Invasion of Ukraine Impacts the HOA Industry: How Should Your Community Prepare?

If we’ve learned anything over the past few years, it’s that we’re all connected. Every day we feel the effects of far-flung events on our daily lives. The economy is truly global.

We watched as COVID turned economies upside down, and we’ve talked before about how inflation affects your HOA. The Russian invasion of Ukraine is another event that impacts your homeowner’s association.

It can be hard to see how a war far away affects your property or common areas. But you don’t have to experience the conflict directly to feel its impact. Combined with lingering economic issues from the pandemic, every industry, including HOAs, needs to be on its toes as things change.

There are two main ways that the war in Ukraine is likely to directly impact your homeowner’s association:

• Increased Energy Prices
• Supply Chain Disruptions

Energy Prices

We’ve all experienced the pinch at the gas pump since the war started. Though gasoline prices in the United States have been steadily falling through the summer, the world is not out of the energy weeds.

Russia is a major supplier of oil to countries around the world. The only country that produces more oil than Russia is the United States. That feels reassuring, but it doesn’t mean we can relax.

Our gas prices may be lower now, but across the globe, countries are feeling the effects of sanctions placed on Russian oil exports. The energy used to produce building materials and other goods abroad is now more costly.

Those cost increases are passed on to construction companies, maintenance companies, and other businesses that work with HOAs. Those businesses, in turn, pass the price increases on to your community.

When we look at oil prices we tend to focus on the price of gas. But much of the energy used worldwide still comes from fossil fuels. When oil is more expensive, everything is more expensive.

We’re seeing that reality reflected in record-high inflation in the U.S.

Supply Chain Disruptions

Have you ever in your life spent as much time thinking and talking about supply chains as you have since 2020? It’s a huge and complex part of our economy. We didn’t know how vulnerable it was to external events until the pandemic.

We learned about the fragility of this vital network. In many places, industries worked hard to make their supply chains stronger and more resilient. But that is hard to do when the pandemic isn’t over. It’s even harder during a large-scale war in Europe.

The goods on which we rely come from all over the world. Materials come from places far from the factories where products are assembled. Those factories are, in turn, far from the people who will eventually use the goods produced.

At every level, there is room for delays and disruptions. It may be low fuel supplies for ships or trucks. It may be labor shortages that continue from the pandemic. It may be the inability of ships to leave port.

The most immediate example of supply chain disruption due to the war in Ukraine is grain. Ukraine grows vast amounts of wheat, corn, and barley, and is a major supplier of grain to many parts of the world. In 2021, the country harvested 84 million tons of grain.

As Ukraine is rocked by war, not only is the production of grain disrupted but so is its export. Russia blockaded a major shipping port and millions of people faced food shortages as a result.

What does that have to do with your HOA? It shows the far-reaching effects of this conflict.

Where your HOA will see the impact of supply chain disruptions caused or extended by the war is in the cost of goods and services. Some products may be unavailable, or quantities limited, driving up prices.

The housing industry, in general, has seen price increases in lumber and other building materials due to both energy costs and supply chain disruptions. That means your HOA budget estimates for both short and long-term projects are likely to change.

HOA Adjustments in a Changing World

World events trickle down to everyone. Inflation is high, putting stress on homeowners’ budgets. The government tries to slow inflation by raising mortgage interest rates, which decreases demand for homes and potentially affects property values.

Rising energy and other prices increase maintenance costs for your property. To make up for those increases, homeowner fees and assessments may rise. This is not a time to rely on outdated information.

Your goal is to be flexible enough as an organization to absorb the ups and downs of a rapidly changing economy. Current, well-organized information is always your best ally, but it’s even more important now.

Here are steps to take with Homey to make your HOA resilient as the Ukraine war impacts the economy:

• Update your reserve study. It’s usually recommended that this be done every three to five years. That isn’t enough right now, especially if you have significant projects planned. If your reserve study is a couple of years old, think about an update.
• Update your operating and reserve budgets diligently and frequently. Reduce the stress of this process by using Homey tools.
• Invest in Homey software to plan and organize your HOA financials. You save time and money with our easy-to-use tools. This is especially important when conditions are changing frequently.
• Make reports available and easily accessible to homeowners. Use your Homey tools to prepare easy-to-understand reports. The more homeowners know about the steps being taken to serve their community, the more trust the board earns.
• Stay in touch with vendors. As prices go up and down, their estimates for goods and services may change. Don’t rely on numbers from 2021. You’ll make better decisions and vendors will be grateful that you’re prepared.
• Have regular meetings. Keep members updated and refocus your decision-making process. You have the tools to make financial presentations. Use those presentations to guide any changes necessary.
• Be flexible, knowledgeable, and realistic. Use your Homey tools to understand the full picture of your HOA financials. Know when it’s possible to make changes that avoid raising homeowner fees. Be prepared to inform homeowners if assessments need to go up.
• Keep lines of communication open. Meet frequently with other board members so everyone is on the same page. Have a way homeowners can reach board members.

The Russian invasion of Ukraine is impacting the entire world, from battle torn cities to your neighborhood. We’re weary after more than two years of a pandemic and it’s hard to brace for this added challenge. Make it easier on yourself and your HOA by using the tools available to help you plan for the future.

It doesn’t always seem like it, but we’re all in this together. Your community needs its HOA board to be trustworthy and prepared. In the greater world of geopolitical conflict, it seems like a small thing. But to the homeowners in your HOA, it’s one less worry they must stack on their already overflowing plates.

When the economy is uncertain, the best thing an HOA can do is offer the reassurance that comes from diligence and informed decision-making. Contact Homey to help you help your community stay prepared and resilient despite these global economic challenges.