Assessments rose by 17%, the largest increase since 1992
Michael McCullough and Joel Baglole
Sun
The value of real estate soared by 17 per cent across B.C. last year — the largest annual increase in more than a decade.
The B.C. Assessment Authority sent assessments to 1.75 million property owners across the province Tuesday and most will record substantial gains.
The total value of the assessments on taxable real estate rose to $581 billion, up 17.4 per cent from $495 billion last year. The assessments reflect the estimated value of homes, commercial properties and farmland as of July 1, 2004.
“In most urban areas we’ve seen major increases,” said John Barry, manager of community relations for the B.C. Assessment Authority. “The province as a whole had a pretty hot real estate market.”
You would have to go back to 1992 to find the same 17-per-cent increase in assessed values provincewide, Barry said.
But for some property owners, the increases could be a mixed blessing. Those whose assessment increases by more than the average in their municipality could wind up carrying more of the tax load. And unless it changes the rules again — as it did last year — the province will start clawing back the homeowner grant for owners of residential properties assessed at more than $585,000.
While traditionally pricey areas such as Vancouver, Victoria and Kelowna saw big increases this year, so did cities such as Prince George and Kamloops.
David Baxter, executive director of the Vancouver-based Urban Futures Institute, a demographic and economic forecasting agency, said the sharp rise in property values is due to a booming provincial economy that has spurred income gains, and the current low-interest-rate environment.
“With declining interest rates, you can buy a more expensive house,” he said.
“And if everyone goes out and buys a house, it pushes prices up.”
The changes in assessed value vary according to location and property type. Waterfront and view homes appreciated the most in 2004. Lakefront property values in the Okanagan Valley, for example, rose as much as 50 per cent, said the Assessment Authority.
“A 50-per-cent increase is the norm for lakefront land,” said Jim Inverarity, the area assessor for the Okanagan Region. “Some properties on the water doubled in value.”
The assessment on the average condominium or townhouse in downtown Vancouver jumped 24 per cent to $320,000 in the 12 months to July 1, 2004, while a west-side house averaged $806,000, up 16 per cent from $695,000 in 2003.
Around the Lower Mainland, increases averaged 10 to 25 per cent, with even higher increases for waterfront lots on the Sunshine Coast, strata properties in North Vancouver and view homes in White Rock.
Among Lower Mainland municipalities only Whistler saw declines — although marginal — in values. The average cost of a two-bedroom apartment in Whistler fell 0.9 per cent to $660,000 from $666,000 on July 1, 2003.
Elsewhere in B.C., active oil, gas and mining industries helped property values in the north recover after several years of decline. And, property values continued to soar on Vancouver Island.
People continue to find Victoria a very desirable place to live,” said Brian Hawkins, area assessor for B.C.’s capital region. “We’ve got a very hot real estate market here.”
Property assessments in Victoria and the surrounding area, including the Gulf Islands, rose 18 to 25 per cent during the survey period, the largest 12-month rise in the past three years, said Hawkins. In some areas of Victoria, estimated residential property values jumped by more than $100,000.
Baxter said he expects property values and house prices in B.C. will rise in tandem with inflation over the coming three years. He said the major risks to the property market outlook are a downturn in the provincial economy and a rise in interest rates.
“I see a stable scenario. I’m reasonably confident, but not bullish,” he said. “Prices will continue to rise, but not as fast as we’ve seen.”
Assessors calculate the value of a property based on factors including recent sale prices for similar properties, and, in the case of commercial properties, revenue generation. Still, the figures remain an estimate. When property is sold, it’s worth what a buyer will pay.
Although the assessments are primarily used by municipal governments to set property taxes, an increase in value does not necessarily mean a major tax hike in 2005, said Barry.
“We’re reporting what the market is showing. The local governments set the tax rates,” he said.
However, owners whose homes rose in value faster than the municipality as a whole will likely see themselves paying proportionately more in 2005. For some, the boom in assessed values also threatens to reduce or eliminate the annual homeowner grant.
The provincial government pays a basic grant of $470 to almost every owner of a home worth up to $585,000 to help cover their municipal property taxes. Victoria pays an additional $275 to seniors, the disabled and people receiving veterans’ benefits. But for every $1,000 over the $585,000 threshold, the government reduces the grant by $10 — meaning people with homes assessed at $632,000 or more receive nothing ($659,000 in the case of homeowners eligible for the additional grant).
Last year, however, then-finance minister Gary Collins boosted the clawback threshold on homeowner grants from $525,000 to $585,000 to account for the increase in home values in 2003. As a result, according to the ministry, 95.5 per cent of B.C. homeowners received the full basic grant in 2004. Finance Minister Colin Hansen will examine the increases this year with an eye to making appropriate adjustments, a ministry spokesman said.
MAJOR REASSESSMENT:
B.C.’s booming real estate sector is boosting the province’s assessment rolls, driven by rising house prices and new construction.
2004 Assessment roll $495 billion
2005 Assessment roll $581 billion
UP 17%
NEW CONSTRUCTION AND DEVELOPMENT:
2004: $10.8 billion
2005: $13 billion
UP 20%
Source: Vancouver Sun
© The Vancouver Sun 2005