Homeowners’ Association Industry Trends for 2025
The homeowners’ association (HOA) industry experienced major shifts in 2024. In particular, the Corporate Transparency Act and new Florida laws affected the operations of many HOAs in the United States. While laws can change and not all HOAs are impacted by the same legislation, HOAs are constantly under the regulatory microscope. And what happens in one state’s legislature is sure to impact what occurs in other states, too.
Alex Turner, business development executive for Associa, predicts that these legal measures will impact industry trends for 2025. Here are eight of her top HOA industry predictions for 2025.
1. Associations will adopt more rigorous budgeting and financial planning practices.
In the past, associations could waive or partially fund HOA reserves. The tragedy in Florida’s Champlain Towers highlighted the inadequacy of this practice. Now, Florida’s Homeowners’ Association Act mandates that associations must maintain sufficient HOA reserve funds for future capital repairs and replacements. Healthy reserves help ensure financial stability and prevent sudden large special assessments for residents.
To meet this new reserve requirement, associations in Florida will need to adopt more rigorous budgeting and financial planning practices. Because comprehensive long-term planning is necessary to estimate future repair and replacement costs accurately, regularly updated reserve studies will become crucial. These reserve studies, conducted by professionals, assess the current condition of major components and project future costs.
2. Some communities may raise assessments.
To build and maintain acceptable reserves, associations might raise monthly assessments. This could affect residents’ finances and may result in resistance or dissatisfaction. Take stock of the community’s income and consider other cost-saving measures, like reallocating funds from other budget areas to cover reserve contributions.
Learn More: Everything HOA Residents Need to Know About Assessments
3. HOAs are likely to benefit from stronger financial health.
Adequate reserves enhance the association's overall fiscal health. Well-maintained reserves can positively impact property values, as potential buyers often view associations with strong reserve funds as more financially responsible and less risky.
4. Boards will be more transparent.
Owning a home in a community association is a worthy investment, but homeowners deserve to know how their money is being spent. Boards may face increased accountability regarding their financial decisions and reserve management. Associations will need to be more transparent about their reserve funds and financial health. To foster openness, boards should:
- Offer a clear and detailed financial report
- Communicate with residents
- Explain the decision-making process
- Engage residents in financial planning
This visibility can help streamline board members’ responsibilities and reinforce their fiduciary duty.
Learn More: 8 Proven Communication Tools for HOA Board Members
5. Boards may have to consider greater legal expenses.
With such a large focus on community associations in state legislatures, HOAs are increasingly under regulatory oversight. To guarantee compliance with new laws and requirements, HOA boards may have to consult legal, financial, and other industry experts, adding to the community’s administrative and legal costs. Non-compliance with HOA laws could cause legal penalties or other consequences, emphasizing the importance of adhering to the new regulations.
6. Some communities will need to change the way they operate.
Boards may adjust their operational procedures to integrate new compliance requirements and to align with the community’s fiscal goals. Boards may change:
- Reserve fund requirements
- Operational budget and strategies
- Maintenance and repair schedules
- Vendor contracts
7. Communities will see additional administrative tasks.
Boards will need to maintain accurate and up-to-date records required by new laws. Many HOAs will have to expand their administrative staff or resources to improve record-keeping measures. In addition, there may be costs associated with ensuring compliance, such as legal fees for advice on reporting requirements or software for tracking ownership data.
8. Board member recruits will have more to consider.
The increased transparency and administrative responsibilities associated with new HOA laws might impact the recruitment and retention of board members. Potential volunteers will need to weigh the time and effort to meet the new compliance standards.
The Complete HOA End-of-Year Checklist
The HOA predictions for 2025 include increased transparency, stronger financial health, and a possible change to community operations. To prepare your association for what’s next, it’s essential to make sure all financial, legal, and operational details are accounted for and correct. Download “The Complete HOA End-of-Year Checklist.” In it, you’ll learn the most important to-dos for your association before January 1 rolls around.