I’m excited to share some more tidbits about Summit County and Denver real estate here in 2024 today. We are going to talk about why monthly fees are going up in real estate.  We know our grocery bills are going up and there’s inflation, but there’s a couple of other factors folded into those monthly bills that we’re going to talk about today.

Beyond just the price of real estate and the interest rates (which impact mortgage rates), there’s a few other fees. While we’re talking about interest rates, I want to acknowledge that they did go up they hit a high in the fall of 2023, and they’ve come back down a little bit since. The Fed has indicated that they might stay stable this year or maybe even come down a little bit, so time will tell. That’s a factor that definitely was a shock the last couple of years that we’re learning to accept a little bit better this year, so now we’re going to talk about some of the other factors that have compounded these monthly costs.

We’re going to start with HOA fees.

We have seen some HOAs go up. There was one place in Castle Rock that was trying to go from $300.00 HOA fee to a $800 HOA fee. There’s some in Summit County that are going up to $1200 per month just for the HOA for a condo, which feels like a lot.  Here’s a couple of reasons why those HOA fees are going up:  

The first one is deferred maintenance.  

They can take care of deferred maintenance along the way by tapping into their reserves if it’s run very well.  That deferred maintenance is kind of expected, and those big investments along the way are often planned for.  But if that doesn’t happen they can be special assessments, which are big lump sums that everybody is assessed and owed either as a one-time fee or over a period of time on top of your HOA fees. What we’ve seen is that a lot of the HOA management companies have not stayed on top of the maintenance, so that’s something to look for as you’re looking at places with HOA’s.  Check the HOA documents and the budgets to see how much they have in reserves and what their capital improvement plans are.

The second piece of HOA fees that are causing them to go up is insurance.

Typically the HOA covers common insurance, including exterior insurance.  We’ve seen insurance prices go up by over 50% over the last three years according to U.S. news update, so that hits homeowners. That hits condo owners, that hits town homeowners, but it also hits the HOA’s that are covering pieces of insurance.   We’ll talk a little bit more about the insurance piece of these monthly fees in a little bit.

The 3rd and final piece of the HOA fees are the utilities.  

Some HOAs cover utilities, and some don’t, but whether you’re paying independently or through the HOA we’ve seen gas go up, electricity go up, water not so much, but that’s another piece that’s just part of inflation that’s covered in your utility bills.  We’ve seen electricity prices go up about 38% over the last five years according to a Colorado Sun article, and whether it’s coming out of your pocket or the HOA has an impact on your monthly fees.

 Those are three reasons (1. deferred maintenance, 2. Insurance, and 3. Utilities) that are driving some HOA costs up.  I tell my clients HOA costs never really go down as things don’t really get cheaper.  They just build up your reserves and prevent you from going up more in the future.

So the next thing I want to touch on is taxes.

There’s been a lot in the media about taxes. As we’ve looked at properties appreciating, home values have gone up.  We got our assessments last year.  A little side note: you have until May of this year to appeal your property assessed value so and if you get your appeal approved they will retroactively bring down your property taxes since 2023. That’s something to keep in mind if you feel like your assessed value is not aligned, you can work with a realtor to get a competitive market analysis that fits within the appraisal guidelines to show them why you think your assessed value is incorrect.

We know the prices have gone up which means property taxes have gone up so in Summit County we’ve seen property values go up 63% from 2022 to 2023 that’s according to the DOLA assessor map for residential value changes.  Property values in Denver have gone up 35%. So why are taxes going up?  We’ve heard from insurance companies that there’s been some costly wildfires in recent years, and there’s the Marshall fire which is now introducing risk in urban areas, not just rural areas.  On top of that, there are supply chain issues, shortage of materials, and then there’s natural disasters like hail, fire, and flooding that all come into play when insurance companies are setting their premiums. Colorado is considering a state-funded insurance that’s an insurance of last resort if nobody else will insure your property.  It won’t be available until 2025, and typically as we’ve seen in California, those are good to have as a last resort but they’re certainly not any cheaper.

Now for insurance.  Like we said before, insurance rates affect the HOA insurance as well as the personal insurance so these are all the factors the HOA the taxes, and the insurance that cause increases in those monthly costs for real estate.

Those are things that I try to help my clients look for as we look for properties. We make sure that our monthly expense calculations are accurately reflected because we see variations in Summit County from like $300 HOA fees to $1200 HOA fees.  We now know what the 2023 taxes are going to be, but some listings don’t necessarily have the latest tax rate reflected.  Then insurance is something that we just want to look at ahead of time to see if there’s any red flags.  

So that is all for today talking about monthly fees in real estate thanks so much for listening. I am Candice De signing off for Mountain Real Estate.  Have a great day and we’ll see you next time!