Province’s decision to freeze property assessments reflects sales volumes, values
While it still remains to be seen what municipal property tax rates will be this year, residents will at least be guaranteed that their share of the tax burden will stay the same or go down compared to last year.
On Monday, homeowners across the province received notice from B.C. Assessment, which determines the approximate value of homes based on sales figures. Because the assessments were made in July, before the economy declined, the province passed special legislation in November that homes be assessed at the lower of July 1, 2008 or July 1, 2007 values.
According to Jason Grant, Area Assessor for Vancouver Sea to Sky Region, assessments stayed the same or dropped for roughly 93 per cent of homes in Whistler, 92 per cent of homes in Pemberton, and 97 per cent of homes in Squamish. Assessments on homes that gained value stayed flat, while homes that lost value were assessed for less.
The remaining percentage, seven per cent in Whistler, saw their assessments go up because the homes were newly built, or underwent major renovations to increase their value.
“The first and most important thing is that the assessment notices contain two values, one for July 2007 and one for July 2008, and depending which one is lower the lower one will be your 2009 assessed value,” said Grant. “We did publish what 2009 values would have been if the special legislation was not enacted, but you will always be assessed by the lower value.”
While municipal governments make the final decision on how much to tax based on budged projections, the assessments can determine your share relative to other residents. For example, if homes in one neighbourhood increase in value while other neighbourhoods see a decline then that will be reflected in taxes.
The July 1, 2007 assessment rolls, which were used to determine property taxes for 2008, were up anywhere from five to 15 per cent in Whistler, the first increase in value in four relatively flat years. The same figures are not available for July 2008 because of the province’s decision to change the assessment process this year.
Pat Kelly, owner of the Whistler Real Estate Company, said the province did the right thing by freezing assessments.
“I can only speak from my personal experience, and that is my property in Pemberton was assessed the same as the year before, as the provincial government outlined,” he said. “The market situation didn’t change in that period of time between assessments, 2007 to 2008, and we’re getting the benefit of a lower assessment than we maybe would have seen in July 2008, when the market was still strong. What will be interesting is to see values when they’re taken again on July 1, 2009, given the economic challenges we’re facing.”
Kelly pointed out that assessments are based on home sales, among other things, and that “price always follows volume.” He says the volume of sales in Whistler is much lower now than the last two years and that he expects to see prices drop slightly in the next year.
“Certainly we can expect to parallel the Vancouver experience right now, and right now the Vancouver Real Estate Board is saying sales are down about 35 per cent over last year,” said Kelly. “However we’re only expecting to see some flattening in prices overall, while Vancouver is predicting a drop (in sale prices) of 15 per cent. Whistler won’t be down nearly as much.
“Did residential prices go down? There’s no indication in the statistics that value changed dramatically — maybe one or two per cent, and in some cases the value has gone up.
“In this case I’d say the provincial government has done a good job insulating property owners from the buoyant market in ’07 or ’08, which was definitely more in Vancouver than here. We didn’t see the same rapid appreciation of values that Vancouver saw, our prices stayed pretty flat, and it was a pretty sustainable market.”
But while sales volume has slowed recently, Kelly says there is some positive news, including the sale of resident-restricted housing at Cheakamus Crossing, Fitzsimmons Walk and Rainbow. And while sales volume may be down, that could change — with mortgage rates and prices coming down, Kelly said, it’s a buyer’s market.
The Resort Municipality of Whistler is currently finalizing its budget, but residents have been warned to expect another property tax increase. Property taxes increased 5.5 per cent in 2008, but that increase was mitigated by a reduction of provincial taxes to less than two per cent. Increased operating costs and the loss of revenues due to the Class 1/6 condo classification are blamed for the increase.
If people have questions about how their homes were assessed or the provincial legislation that essentially froze assessments at July 2007 values, Grant recommends that people visit www.bcassessment.ca.
As well, there are changes to the B.C. Home Owner Grant system, which can now reduce property taxes by up to $570 on homes up to $1,164,000 in value.
The province created a new Property Tax Deferment Program for homeowners facing hardship as a result of the financial crisis, and that have at least 15 per cent equity in their homes. The province will pay property taxes for qualified applicants in the 2009 and 2010 tax years, but the homeowners owe that money and interest back to the province. The taxes do not have to be paid back until the home is sold or ownership is transferred to someone other than a spouse.
Sea to Sky sales, median prices fluctuate in 2007-08
B.C. Assessment figures show that the median price of homes sold in Whistler has fluctuated in the past year, but Grant cautioned that figures have to be taken in context from quarter to quarter. Lower averages in one quarter might reflect the sale of smaller condos or resident restricted housing in one quarter rather than a loss in the value of larger homes, while the sale of a mansion might skew numbers upward. Home values are assessed annually from July to July, and are based on neighbourhood values, sale value, size, lot size, age, location and other factors.
In the past two years the median price of homes in Whistler has ranged from $1,045,000 in the fourth quarter of 2007 to $1,395,000 in the first quarter of 2008.
What is interesting to note is the number of homes sold in Whistler in 2008 is down significantly. In 2007 there were 186 homes sold in Whistler, compared to 100 homes from January to October in 2008, the last month data was available last year. There were 58 homes sold from July to September 2007, compared to 26 in the same period of 2008.
In Squamish, the median price for homes increased from $433,500 in January to March 2007 to a high of $522,500 in April to June 2008. That median dropped to $499,000, as did the number of homes sold. From July to September 2007 there were 80 homes sold, compared to just 35 during the same period in 2008.
The situation was similar in Pemberton, although Grant says its hard to attach significance to the numbers because of the relatively few homes sold. From January to March 2007, the median price of homes was $430,000, increasing to a median of $575,000 from April to June 2008. The median dropped to $535,000 from July to September, while the volume of sales ranged from six homes to 18 homes per quarter.
By Andrew Mitchell