Inflation is Coming for You
Lyndsey McNally is Director, Originations at CWB Maxium Financial.. She joined the CWB team in 2020 with an extensive background in the condominium sector, having worked with condominium corporations in the GTA since 2022. Lyndsey is a licensed condominium manager and in 2017 was selected as property manager of the year by the Association of Condominium Managers of Ontario (ACMO). Lyndsey works exclusively with condominium corporations, property managers and other condominium stakeholders to develop and implement customized financial solutions.
The table above has condos sounding the alarm bells! It reflects the StatsCan Residential Construction Price Index from 2020 to the end of first - quarter 2022, and indicates that in just over two years, the average construction inflation rate for the eleven census metropolitan areas was a staggering 36%. Our current economic environment is difficult as we come towards the end of the COVID19 pandemic, throughout which we ’ ve seen real estate bidding wars, long periods of low interest rates, and a suffering supply chain. In the news, we hear a lot about the Consumer Price Index increasing the cost of living. We are all feeling this in the price of gas, groceries, and daily cost of living. The Consumer Price Index for same period shown above was 22.4%. This general cost of living increase will surely impact condo fees, but the Construction Price Index long - term will have a greater impact as this affects the capital repair plans for condominium corporations, particularly the need to increase contributions to the Reserve Fund to support projects now that they are becoming more and more expensive. Keep in mind that it ’ s not just our projects today that are impacted, but also cost uncertainty for future projects must be accounted for. How does this affect our projects today? Reserve Fund Planners in Ontario typically assume a long - term inflation rate of 2 - 3%. If your condominium corporation is executing a major repair project this year, it has inflated faster than your Reserve Fund contributions have increased to support the costs.
CCI Review 2022/2023 — 1
August 2022 - 14
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