Having a reserve fund is one of the essential things that homeowner’s associations (HOAs)in New Jersey can do for their community. Supported by a NJ reserve study, the board of directors will use this stock money to pay for replacement and repair costs of various areas in the neighborhood. The board can also use it to renovate the common areas within their jurisdiction that will benefit the residents. Moreover, the HOA can use this money to cover unforeseen expenses in the future, like repairs for damage caused by natural disasters.
With reserve funds usually prepared for future projects, numerous factors can affect the information that HOAs have. The worldwide supply chain turmoil has recently affected countless businesses across many industries.
Due to congestion in ports and limited operation capacity, the manufacturing of various raw materials and finished goods has decreased in the past year. The arrival of COVID-19 led to massive delays in material procurement, resulting in empty shelves in countless stores. In the construction sector, the lack of necessary goods has caused setbacks in target completion dates for numerous projects in the country.
This mess in the supply chain also contributed to record-breaking high prices of goods and services in the country. In 2021, the inflation rate hovered at around 5% every month. It reached as high as 7% in December, the highest in more than three decades. Many experts predict that the rise of prices will continue until this year.
For HOAs, this alarming situation in the supply chain means that the information they currently have is already out-of-date. For ongoing projects or programs that are due soon, the scarcity of materials needed will lead to lengthy postponement of the finishing time. Apart from that, the reserve fund they have saved before might not cover the expenses needed because of increased prices. This is why getting another reserve study in New Jersey becomes a necessity for HOAs moving forward.
To learn more about how the supply chain mess and inflation issues impact a reserve study, check this infographic from Lockatong Engineering.