BC Assessed Values Leave Homeowners, Buyers and Sellers with Question

Catherine Musgrove
REW

You just bought a home for $2 million in lower mainland BC, only to receive notice from BC Assessment saying your property is valued at $1.7 million. How about your neighbour’s condo that sold for $700,000 and is now assessed at $595,000? Say what? Maybe, you just bought a home in Kitimat for $1 million, and you found out that your property has increased in value to over $1.4 million in six months. That’s a pretty good return!

In early January, homeowners across British Columbia received their 2020 assessed property values, released by BC Assessment. For the most part, the province remains relatively stable. However, there are significant changes to note, including a dramatic decrease in values in the lower mainland by as much as 15 per cent and increases of 41 per cent in smaller areas such as Kitimat. Regardless of the situation, it can be a confusing landscape to navigate as a homeowner, seller, or buyer. Here is a look at some of the need-to-know points that demystify the real versus the perceived impact of the newly released property assessments.

What is the BC Assessment?

BC Assessment provides a predictable base for real property taxation in British Columbia. It determines ownership, tax liability, classifies and values each property. To meet their mandate, BC Assessment completes property assessments every year. The values are completed by July 1st, and the information is based on the market trends from the previous year.

These assessments then provide the foundation for local and provincial taxing. They are used by the local and provincial taxing authorities to calculate the billions of tax revenue each year that will fund community services provided by local governments throughout the province.

“The assessments are based on what was happening in the marketplace by July 1st of last year. They reflect the conditions at that time,” says Tina Ireland, spokesperson and assessor with BC Assessment.

How Does the Assessment Affect Property Taxes?

Although BC Assessment exists for the sole purpose of creating information for the government to determine property taxes, this description can be misleading. Governments still need a tax income to provide all the needed services in your community. By lowering taxes, some of those needs may not get met. Most homeowners will see very little change in their property taxes despite their property value decreasing. Streets still need to be cleared, schools need to exist, garbage needs to be removed. You get the picture.

What matters is what is going around you. Essentially, your property taxes have more to do with your neighbourhood and community than it does with you. If your home’s value decreases more than other properties in your neighbourhood, you might expect lower property tax hikes. If your property held its value more than others in your area, then you can expect larger tax hikes.

With the larger properties, a.k.a. Mansions, significantly dropping in value around Vancouver, you can expect a relatively larger increase in Condo property taxes, even though their assessments saw a 7% decrease in value. There is a fundamental shift in the tax burden to the lower-end properties.

Your taxes are dependent on your property’s changes relative to your community

“If the change isn’t great, then the effects will be negligible. If your change is greater, then you may see an impact,” says Ireland.

When predicting whether your taxes will go up this year, keep in mind City Council recently approved a 7% tax increase (better than the 8.2% they originally proposed). To expect property taxes to go down because the assessed value has gone down isn’t necessarily going to happen.

How Does it Affect The Real Estate Market?

This is the interesting part. Property Assessments are based on what happened in the months leading up to the July 1st cut-off of the previous year. In this case, July 1st, 2019.

“The start of last year saw a slump in the housing market,” says Lyn Hart of MacDonald Realty. “Because the market was slower, it affected the information used for the assessments. The market picked up in the latter half of the year.”

The assessments are not exactly a reflection of what is happening in the current market. Tina Ireland is quick to point out the assessments are just another piece of information Realtors can use to set prices and negotiate in the housing market.

“There are valleys and hills throughout time with the housing market. Sometimes it is a seller’s market, and other times it is in favour of the buyer. There is rarely a dramatic shift,” Hart adds.

There is a difference between the assessed value on home versus the market value. Fluctuation in the market is natural.

“There is not a huge bubble in the lower mainland. It is simply a pendulum that can swing in either direction for a period,” adds Hart.

How Does it Affect Prices?

Homes have an assessed value and an appraised value. The assessed value is used by tax authorities to determine how much your tax bill should be each year. The appraised value represents the fair market value of your home. The price, however, is mostly determined by what buyers are willing to pay for the property. As a seller, work closely with your Real Estate Agent in determining your price. They will have their finger on the pulse. 

What Does it Mean for First-Time Home Buyers?

Hart says there is still a small window available for homebuyers to cash in on a “deal.” However, she is quick to advise not to sit around and wait for prices to drop further because markets continue to pick up.

Although consumers may see a correction in the marketplace for more affordable housing, don’t expect it to bottom out, she adds. In the end, prices will still be determined by what people are willing to pay.

What Does it Mean for Current Homeowners?

It is natural to be concerned with decreases in assessed property values, your home is not worth as much you might have paid for it, or you may not get the return on investment you hoped. Your property assessment may not affect your market value.

Homeowners may also wonder if it will affect their ability to renew their mortgages if they owe more than their home’s current assessed value. Rest assured, in most cases, mortgage renewal should not be an issue. If you are renewing with the same lender and your credit standing has not deteriorated, then the process should be smooth.

The challenge may arise if you are changing lenders, trying to access more funds, suffer from poor credit, or trying to negotiate a new mortgage. If it is a straightforward renewal, don’t worry, you won’t be kicked out of your home because the assessed value has decreased.

Overall, the housing marketing across BC remains moderate, and Real Estate Agents are already anticipating a busy spring as buyers and sellers negotiate their dream home. Be aware of the assessment and what it means to your community, look at what you can afford, and then negotiate based on the market value for your neighbourhood. 

© 2020 REW. A Division of Glacier Media

RECBC introduces mandatory training to prevent money laundering

Steve Randall
Canadian Real Estate Wealth

The Real Estate Council of British Columbia has become the first industry regulator in Canada to introduce mandatory training to help combat money laundering.

RECBC’s course will give licensed real estate professionals tools and insights to spot the signs of money laundering and help keep the proceeds of crime out of the province’s real estate market.

“For most people, purchasing a home is the biggest financial commitment of their lives.” said Erin Seeley, RECBC Chief Executive Officer. “Protecting consumers so that they can feel confident about their real estate transaction is our first priority, and that’s why we’ve decided to make this new course on anti-money laundering mandatory for all real estate professionals.”

The course was proposed in May 2019 amid several measures designed to tackle money laundering in real estate following two government reports highlighting its proliferation.

The RECBC will merge with the BC Financial Services Authority (BCFSA) in 2021, creating a single regulator for financial services in the province.

“Education is a key initiative in the fight to reduce money laundering,” said Blair Morrison, Chief Executive Officer, BCFSA. “RECBC’s introduction of mandatory anti-money laundering training for real estate professionals will help ensure that buyers and sellers of BC real estate are better protected from the negative impacts of money laundering.”

Copyright © 2020 Key Media Pty Ltd

CMHC recorded Metro Vancouver with the highest housing starts

Gerv Tacadena
Canadian Real Estate Wealth

Metro Vancouver managed to buck the national downtrend in housing starts, ending 2019 with a record-high growth, according to the latest figures from Canada Mortgage and Housing Corporation (CMHC).

Over the year, the metropolitan region recorded 28,141 housing starts, beating its previous record of 27,914 in 2016.

Of the total housing starts, 21,321 were for condo units, 3,426 for single-family homes, 530 for semi-detached dwellings, and 2,864 for townhouses.

Vancouver was the busiest municipality, comprising 6,823 of the total housing starts last year. The table below shows the five most active municipalities for new housing starts in 2019:

According to CMHC, around one in four building commencements were for rental housing. Vancouver also reported the highest number of rental housing starts at 2,716, followed by Surrey at 805, Burnaby at 509, Coquitlam at 481, and North Vancouver at 451.

This strong trend in housing starts, however, is not expected to continue this year.

The growth in starts last year was supported by strong presale activity over the past few years, said Bryan Yu, chief economist at Central 1 Credit Union.

“While the trend in housing starts is elevated, a pullback of about 20% is forecast for 2020. Nevertheless, recent interest rate cuts, rental demand and the federal first-time home buyer Incentive program will support activity,” he said in a think piece in Business In Vancouver.

Copyright © 2020 Key Media Pty Ltd

Second half of 2019 showed positive signs

Steve Randall
Canadian Real Estate Wealth

The first half of 2019 was a struggle for British Columbia real estate markets but the second half of the year showed more positive signs.

Figures from the British Columbia Real Estate Association show total residential sales in 2019 of 77,331, down 1.5% from the 78,516 in 2018. But the second-half comeback means an optimistic tone for the start of 2020.

“Housing markets across the province staged a strong recovery in the second half of 2019,” said BCREA Chief Economist Brendon Ogmundson. “This sets up 2020 to be a much more typical year than what markets have experienced recently.”

The annual average MLS® residential price in BC in 2019 was $700,460, a decline of 1.6% from $711,564 recorded the previous year. Total sales dollar volume was $54.2 billion, a 3% decline from 2018.

Sharp rise in December Looking at BC’s sales for December 2019, there was a total of 5,218 through the MLS, up 48.9% year-over-year.

The average MLS® residential price in BC was $755,165, an increase of 8.7% from December 2018 and the total sales dollar volume was $3.9 billion, a 61.8% increase year-over-year.  

Copyright © 2020 Key Media Pty Ltd

By all accounts, 2019 was a rebound year for the Greater Toronto Area real estate market

Penelope Graham
other

By all accounts, 2019 was a rebound year for the Greater Toronto Area real estate market. A total of 87,825 homes traded hands over the course of the year, a 12.6% annual uptick that effectively pulled the market out of the 10-year low it experienced in 2018. Stronger sales in the region were due to a number of factors including borrower acclimatization to the federal mortgage stress test, low mortgage rates, high investor interest, as well as a steady flow of immigration to the GTA.

Coupled with a decline in MLS listings, that effectively put the boil under price growth in 2019 – home prices rose an average of 4% across the GTA year over year to $819,319, requiring buyers to come up with $32,079 more than they needed to the year prior. Sold home prices in Toronto rose 5.6% to an average of $883,520 over the course of the year.

Median Home Price Gains Rival That of Incomes Across GTA

However, home price jumps were even more significant across median home prices – the mid-point of the market most likely to impact middle-income buyers; prices rose 6% in the GTA to $710,000, a difference of $40,000. To put that into perspective, that would most impact buyers looking to purchase a condo unit within the city of Toronto, or move-up housing, such as a semi-detached house, in other GTA municipalities. 

As well, a common narrative in Canada’s hottest markets is that home price growth has steadily outpaced that of local incomes. With this in mind, how do 2019’s median price gains in the GTA stack up as a percentage of after-tax household incomes? To find out, Zoocasa compiled 2019 median home prices and gains within municipalities in seven GTA regions and compared them to the after-tax incomes earned in each to see how home values have increased relative to local household earnings. Median home prices were sourced from the Toronto Real Estate Board, while median after-tax household incomes were sourced from Statistics Canada.

City of Toronto Median Home Price Gains Nearly Equivalent to A Full Year of Income

The findings reveal that the City of Toronto experienced the greatest increase in median home prices throughout 2019, with gains nearly equivalent to an entire year of after-tax income; median home prices rose by 8% to $720,000 – a difference of $55,000 that accounts for nearly 94% of the median Toronto household after-tax income of $58,264. 

The largest increases took place in Toronto Central, where median prices rose 9% year over year to $705,800, a difference of $55,800, accounting for 96% of income. That’s followed by Toronto West, which rose 8% to $715,000, up $55,000 and accounting for 94%, while Toronto East experienced a 6% increase to $740,000, up $45,000 and accounting for 77% of income.

Simcoe, York Region See Smallest Median Home Price Gains

On the other end of the scale were some of the GTA’s northern-most markets, with Simcoe County and York Region home to municipalities with the smallest price increases, accounting for the least proportion of local incomes.

Simcoe County as a whole experienced the smallest median home price increase of all GTA regions, with the median home price hitting $588,250 in 2019 – up just 2%, and clocking in at an increase of $13,250. That accounts for 20% of the local median after-tax household income of $67,022. The predominantly rural Simcoe township of Adjala-Tosorontio saw the largest decline in home prices across the GTA, down -10% to $630,000 – a difference of $69,000, and accounting for -81% of local incomes. The rest of Simcoe county municipalities experienced price increases between 2 – 5%, accounting for 14 – 39% of local incomes.

York Region as a whole also experienced a 2% growth in median home prices, to $850,150, a difference of $20,150 that accounts for 24% of local incomes. Its municipality of King saw the second-largest decrease in median prices in the GTA, falling -2% to $1,270,000. That’s a difference of -$20,000, and accounting for -20% of local incomes. The remainder of York region saw year-over-year prices changes between 2 – 5%, accounting for 22 – 54% of local incomes.

Peel Region overall experienced the second-highest year-over-year median price increase, up 6% to $700,000 – a difference of $40,000, accounting for 53% of local incomes. Individual municipalities saw price growth between 4 – 7%, accounting for 31 – 64% of incomes.

Orangeville saw median home prices rise 5% to $551,500, a difference of $26,500, accounting for 36% of median incomes. Likewise, in Halton region, home prices rose 4% to $770,000, a difference of $32,500 – accounting for 37% of incomes, with individual municipalities increasing 4 – 7%, accounting for 34 – 53% of incomes.

Finally, Durham region saw the second-lowest appreciation, with median home prices up 4% to $580,000, a difference of $20,000, accounting for 26% of median incomes. In its municipalities, growth ranged between 0 – 8%, accounting for 2 – 65% of local incomes.

© 2015-2017 Zoocasa Realty Inc.,

Check out the infographic below to see how median home prices have changed across the GTA in 2019, and how they stack up as a percentage of local median incomes:

Residential sales down 1.5 percent from 2018

REBGV

The British Columbia Real Estate Association (BCREA) reports that a total of 77,331 residential unit sales were recorded by the Multiple Listing Service^® (MLS^®) in 2019, a decline of 1.5 per cent from the 78,516 units sold in 2018. The annual average MLS^® residential price in BC was $700,460, a decline of 1.6 per cent from $711,564 recorded the previous year. Total sales dollar volume was $54.2 billion, a 3 per cent decline from 2018.

“Housing markets across the province staged a strong recovery in the second half of 2019,” said BCREA Chief Economist Brendon Ogmundson. “This sets up 2020 to be a much more typical year than what markets have experienced recently.”

A total of 5,218 MLS^® residential unit sales were recorded across the province in December, up 48.9 per cent from December 2018. The average MLS^® residential price in BC was $755,165, an increase of 8.7 per cent from December 2018. Total sales dollar volume was $3.9 billion, a 61.8 per cent increase year-over-year.

Total active residential listings were down 10.6 per cent to 24,691 units in December. Total inventory of homes for sale have declined more than 10 per cent on a year-over- year basis for two straight months.

Picasso Collection to be linked to new transit station

Kathleen Freimond
The Vancouver Sun

The boom in residential development in Richmond’s No. 3 Road and Capstan Way area has hastened the construction of a new station on the Canada Line — good news for buyers of units in Concord Pacific Development’s new Picasso Collection at Galleria, who can look forward to the expected completion of the station just prior to the three mid-rise towers, says Grant Murray, Concord Pacific’s senior vice-president of sales.

While the new station has been on the cards since 2012, the transfer of $28 million in developer-supported funds from the City of Richmond to TransLink will enable the design for the new station to be finalized to meet an expected completion date in mid-2022.

Making the announcement recently, Richmond Mayor Malcolm Brodie said: “This is an excellent example of how the City of Richmond works with developers and partners such as TransLink to build strong communities. Parks, trails, recreation facilities and even green spaces are often created by developers who are building higher-density communities in urban areas. Now, through a shared vision and this precedent-setting agreement, we have an important transit location as well.”

With more than 6,000 residential units being built in and around the Capstan Village area, the new station will link the neighbourhood to the Canada Line, used by about 90,000 people each weekday, according to TransLink CEO Kevin Desmond.

Galleria, Concord Pacific’s five-tower master-planned community on Hazelbridge Way comprises the Da Vinci Collection and the three-tower Picasso Collection, with its 344 residential units and more than 30,000 square feet of commercial space. The focus will be on wellness and health-related tenants for 22,000 square feet of commercial space on the second level, while the ground floor will accommodate a coffee shop and other retailers, plus a 13,000-square-foot community arts facility.

Picasso offers a range of one-, two- and three-bedroom units and seven townhomes.

“The one-bedroom units are attractive to first-time buyers and the two- and three-bedroom and townhomes are primarily for young families,” Murray says.

The homes’ ceiling height of eight feet and eight inches provides an elegant basis for the interior design.

The team at LIV Interiors wanted to keep the interior design timeless and sophisticated, says the company’s senior interior designer, Seng Sengsavanh.

Buyers can choose from two colour palettes: Sunrise Chiffon and Evening Silk.

“Sunrise Chiffon caters to the morning person who enjoys a soft, subtle and modern colour palette,” says Sengsavanh.

This light, warm scheme is ‘hygge’-inspired, he says, referencing the Danish design concept that creates a cosy and comfortable ambience.

“Evening Silk caters to the night person who prefers a bolder, deeper colour palette with stronger contrasts. It is elegant, sophisticated and inspired by the shades of grey we experience throughout our West Coast winters,” says Sengsavanh.

The key element in each colour scheme is the wood finish. The white oak cabinetry and flooring in Sunrise Chiffon are complemented by the tile selection that reflects and echoes the whiter woodgrain, while the darker grey oak cabinetry and chocolate-coloured laminates convey an earthier opulence, reminiscent of a private library or boutique hotel lobby, he says.

The large-format porcelain tiles specified for the kitchens and bathrooms add design flair.

“By using high-quality Calacatta Light tile with its white body and grey-toned veins easily complements the anchoring wood finishes in both colour schemes and adds a touch of modern sophistication,” Sengsavanh says. “Both colour schemes will provide homeowners with a beautiful foundation to develop their own personal design style.”.

The kitchen in the display suite at the sales centre (at 8511 Capstan Way in Richmond) showcases the darker palette with its marble-look backsplash and engineered quartz countertops. The cabinets include soft-close hardware by Blum, magic corners (where applicable) and a sliding basket under the sink.

Bosch appliances are standard, with the option to upgrade to Miele (as shown in the display suite). The four-burner cooktop is gas and the counter-depth refrigerator with freezer drawers is integrated to blend seamlessly into the cabinetry. The dishwasher, located in the peninsula, is also integrated.

In the bathrooms, the vanities have the same wood-grain laminate finish as the kitchen cabinets. The undermount sinks are by Kohler with polished chrome faucets and shower heads by Grohe.

The range of amenities for Picasso (and Da Vinci) reflects Concord Pacific’s philosophy of providing shared amenities within its developments.

“It’s economy of scale and by spreading the amenities between Picasso and Da Vinci it keeps the monthly costs down,” Murray explains.

Amenities located in the Picasso Collection include an indoor swimming pool, fitness centre, heated stone lounge, ping pong and yoga studio, a putting green and outdoor terrace. Other amenities at Da Vinci include a sports lounge, social lounge, mah-jong and card room, and a karaoke and music room.

 “We treated each amenity space like a blank canvas. We used lighting, materials and finishes in creative ways to turn each space into works of art,” Sengsavanh says.

He notes two standout features are the expansive back-lit stretched ceilings in the fitness centre with metal band accents and the custom back-lit forest scene in the heated stone lounge.

While the new SkyTrain station will undoubtedly be a favourite option for commuters, Picasso includes electric-vehicle charging stations in every parking stall and individual Quadlogic metering ensures residents only pay for their own energy consumption.

Picasso Collection at Galleria | Concord Gardens

Project address: south side: 8671 Hazelbridge Way, Richmond | north side: 8611 Hazelbridge Way, Richmond

Developer: Concord Pacific Development Inc.

Architect: GBL Architects Inc. and IBI Group

Interior designer: LIV Interiors

Project size: 344 units (including seven townhomes)

Bedrooms: 1, 2, 3 bedrooms

Unit size: 465 – 1,718 square feet

Price: Starting from mid $500,000s

Sales centre: 8511 Capstan Way, Richmond

Sales centre hours: 11 a.m. – 5 p.m., daily

Phone: 604-233-7748

Website: concordgalleria.com

© 2020 Postmedia Network Inc.

December housing starts across Canada were down

Steve Randall
REP

There was a decline in the 6-month moving trend in Canadian housing starts in December.

New figures from CMHC show a trend of 212,160 units, down from 219,921 in November.

“The national trend in housing starts decreased in December,” said Bob Dugan, CMHC’s chief economist. “The declines are primarily led by lower-trending multi-family starts in Toronto, Montreal and Ottawa. However, the stable starts at year-end in Vancouver and significant growth in Calgary helped to partially offset the declines in other major centres.”

The standalone stats for December show a 3% decrease month-over-month, taking the seasonally adjusted annual rate of housing starts down to 197,329 from 204,320 in November. Rural starts were estimated at a SAAR of 11,395 units.

The decline highlights concern expressed this week by BoC governor Stephen Poloz regarding the disparity between housing supply and demand.

Copyright © 2020 Key Media Pty Ltd

Canada’s housing market strengthening

Steve Randall
REP

Canada’s housing market is showing renewed strength as economic conditions and population growth drive demand. BC, Ontario, and Quebec are seeing the largest shares of immigration.

But the governor of the Bank of Canada says that this demand is not being met by supply and there are risks in certain markets of “froth” – conditions that can precede a housing market bubble.

Speaking at the Greater Vancouver Board of Trade, Stephen Poloz said that the central bank will be watching markets closely for signs of risk.

“The fact is, the fundamental demand for housing appears to be outpacing our ability to build new homes, which can put renewed upward pressure on prices,” Mr Poloz said. “It can be very unhealthy when the situation becomes speculative because it can lead to a sudden downdraft in house prices later, with wider implications for the economy.”

The governor said that the stronger housing market activity will mean greater levels of household debt, which continues to be the biggest financial system vulnerability. But he noted that the B-20 mortgage guideline is reducing the riskiest borrowing and concluded that the BoC is “confident that the stock of household debt is becoming less of a threat over time.”

Economy, labour market

Mr Poloz said that the jobs market is positive, despite a recent slow down in new jobs. He said wage growth has continued to strengthen.

Global trade policy remains a key concern for the Bank of Canada with uncertainty surrounding protectionism and future policies holding back exports and investment.

Overall, the governor talked of the resilience of the economy and the ability of business to adapt. But he said the BoC will continue to monitor the situation closely.

Copyright © 2020 Key Media Pty Ltd

Vacancy rate of 1.1% in Metro Vancouver

Ephraim Vecina
Mortgage Broker News

Rental housing in Metro Vancouver saw notable growth in 2019, amid cooling home ownership and falling property values.

Over the last year, property values in the city fell by as much as 15% in several cases. Meanwhile, the market’s rental segment is expected to have a vacancy rate of 1.1% by the end of 2019, per the CMHC’s last prediction in October (up by 1% from 2018).

Two-bedroom average rent rates are also forecast to settle at around $1,715 (from $1,649 in 2018).

“It’s a combination of issues that need to get fixed — not just in Vancouver but a lot of other [surrounding] municipalities,” LandlordBC chief executive David Hutniak told CBC News.

A spokesperson for CMHC reiterated that it is still “confident” in those predictions. These levels will place Metro Vancouver among the regions with the nation’s lowest vacancy rates and highest rents.

However, the market’s current pace of rental development is not nearly enough to address its long-running housing affordability crisis, according to Canadian Centre for Policy Alternatives senior economist Marc Lee.

Last month, Lee argued that while construction activity in the market is by no means slow, a “severe mismatch” exists between what is being developed and what is actually in short supply.

“We’ve had a major building boom in recent years,” Lee told CBC News at the time. “But for some reason, we’re not building the type of housing that we actually need to address the crisis.”

“We need to think a lot bigger,” he added. “Generally, we find that we need about 5,000 new rental units per year just to stay level — so just to tread water, but not really to dig in and address the crisis.”

“We need another 5,000 units per year to address the backlog.”

Copyright © 2020 Key Media