Getting through all of the Christmas presents, dinners and travel has probably made you not want to face another holiday much less another financial year with its ups and downs. But if you live in a condominium complex, this is the time when many associations are getting ready to send their members notification of their monthly, quarterly or annual fees for the new year.
Florida law allows for two types of reserve funding for associations. One is the pooled method and one is the straight-line method. Florida condominium regulations have always required associations using the straight-line method to establish reserves specifically for particular items. This calculation uses a formula that divides the cost of replacing that item by the number of useful years that item has left, minus the reserve funds on hand for that item. Per Florida law, each separate reserve can only be used for that particular reserve item unless a majority of the members vote to amend it.
Several years ago, a different method of reserve funding was introduced and accepted through an amendment to the state’s administrative rules called the “pooled” method. Under the pooling or cash flow method, each reserve item is still separately funded, but the money is put into one account. In theory, the money should be available when needed, with a lower contribution than required using the straight-line method. Since it can be a complicated calculation, the schedule should be prepared by an accountant or reserve consultant. A pooled reserve fund can then be used for any reserve item as the need arises, creating more flexibility for the board which most associations see as the main benefit. The downside of course, is proper and diligent oversight of the pooled reserves.
Going into the new year not only do condo boards have to review their positions, all financial markets need to as well and most of them are up. And if we’re talking real estate there aren’t too many downs there either with the market continuing to stretch into new and higher territory. The November sales statistics for Manatee County as provided by the Realtor Association of Sarasota and Manatee are looking good.
Single-family homes during November this year compared to last year closed 10.9% more properties. The median sale price, half above/half below, increased 2.1% to $319,995 and the average sale price increased 2.2% to $388,513. The median time to contract which is really the measure by which how quickly a property sells was down 14% in November to 43 days. So, if this trend continues, single-family homes on average can expect to be in contract within 43 days of placing the property on the market. The month’s supply of available properties continues to drop leaving November with only 3.5 months of inventory.
Condo closed sales were down by 19% but their median time to contract was also down 32.6% with an average of 31 days to contract. Supply of available properties is also down to 3.7 months – to me, these numbers appear to be linked. As far as sale prices, median sale price was up 11.4% to $207,750 and the average sale price was up 13.4% to $255,855.
The biggest challenge to our real estate market continues to be the lack of inventory. Now that the selling season is underway, we’ll see if that number moves in December.
I know it’s New Year’s and you may not want your head to be flooded with this stuff right now, but if you live in a condo, save this column; it may come in handy when you’re more clear-headed. Happy New Year!
