End of the world? Doubtful. End of the Victoria real estate market stability? Perhaps.
Here's a prediction post for you to do some educated guessing.
From Animal Spirit:
Here's an interesting blog post with all kinds of good, sound, expert economic analysis of the Canadian housing market data. It doesn't deal directly with Victoria, but offers some provincial analysis that we can reasonably extrapolate to the local market. Isn't a particularly pretty picture, but then again, nor has the Victoria market been a pretty picture post 2009.
And of course, we have Marko Juras to thank for the December 2011 snapshot to further base some of your predictions on (still 3 days left though):
December 2011 (month to date)
Net Unconditional Sales: 301
New listings: 441
Active listings: 3,695
Sales to new listings ratio: 68%
December 2010
Net Unconditional Sales: 349
New listings: 522
Active listings: 3,252
Sales to new listings ratio: 66%
Sales to active listings ratio: 10.7% or 9.3 MOI
On a personal note, I want to thank the dedicated readership here and the contributions of the those who share data and anecdotes. This blog and its discussion is so much more because of your time and efforts. It's appreciated and you're the reason why it continues to be what it is. If it weren't for your commentary, analysis and data sharing, it would have morphed into home-updating-on-a-budget 101, which partially explains my growing absence.
Here's a prediction post for you to do some educated guessing.
From Animal Spirit:
Spent a bit of time modeling the relationship between the listing price to sales price ratio (y axis bar) and month within 2011 (x axis bar). While the pending, new listings and price change ratio medians jump about quite a bit, the sum of all listings with an update on PCS exhibits an extremely strong relationship to month. A full 92% of the variability in the median list price to assessed price ratio (for the median for the entire month) is explained by the month of the year. Using the equation y = 106.14 -1.0428 x, one can see that list prices started at 106% of assessed and have dropped by 1.04% per month. Only 8% of the change in the list price to assessed price (monthly median) ratio is not explained by the chimes of the clock.
Looking forward, what does this mean? Absolutely nothing of course. Unless you want it to be different here. Or prefer to see if the 7K drop per month on a 500K house continues.
Here's an interesting blog post with all kinds of good, sound, expert economic analysis of the Canadian housing market data. It doesn't deal directly with Victoria, but offers some provincial analysis that we can reasonably extrapolate to the local market. Isn't a particularly pretty picture, but then again, nor has the Victoria market been a pretty picture post 2009.
And of course, we have Marko Juras to thank for the December 2011 snapshot to further base some of your predictions on (still 3 days left though):
December 2011 (month to date)
Net Unconditional Sales: 301
New listings: 441
Active listings: 3,695
Sales to new listings ratio: 68%
December 2010
Net Unconditional Sales: 349
New listings: 522
Active listings: 3,252
Sales to new listings ratio: 66%
Sales to active listings ratio: 10.7% or 9.3 MOI
On a personal note, I want to thank the dedicated readership here and the contributions of the those who share data and anecdotes. This blog and its discussion is so much more because of your time and efforts. It's appreciated and you're the reason why it continues to be what it is. If it weren't for your commentary, analysis and data sharing, it would have morphed into home-updating-on-a-budget 101, which partially explains my growing absence.
64 comments:
HHV - now you have experienced one of the few talked about advantages of renting - the time liberated from not doing maintenance or updating.
Very interesting graph - $7,000 a month decreases in price is something to watch to see if it continues in 2012.
A simple man, TBH I miss those days. Every renter should absolutely love the fact they can call their landlord to fix their shower leaks etc... provided they have a responsible landlord, which isn't always the case.
Thankfully, our updating isn't forced by necessity, so there's a bit more rhyme and reason to the madness; but time consuming no less, and more expensive than most newbie homeowners would anticipate I'd wager.
Just browsing some listing and I came across this...
302 - 627 Brookside Road listed for $249,900 (started for $314,000 275 days ago). Original purchased for 2007 for $309,900 + GST.
Langford condos continue to make poor investments.
Someone asked about assessments in Victoria. Looks like assessments will be going up across the CRD...
'Good news' coming to region's property owners
The majority of people who own property in the Capital Region won’t be disappointed when their 2012 property assessment notices arrive in their mailbox next week.
“I think people are looking at what the value of their real estate is doing. Obviously, people have got a lot of money invested in real estate,” said Reuben Danakody, an assessor at B.C. Assessment’s Victoria-based Capital Region office, which services more than 141,000 properties valued at nearly $92 billion. “Most want to see their values flourish.
^ There's real estate spin and then there's real estate spin.
Hard to tell what they meant there. Is the good news that assessments are going up, or that they aren't going down and are instead stable? Guess we'll see soon enough.
Get your appeal in fast, you only have a short time to file an appeal. You can always withdraw your appeal later.
The median price for houses in Victoria, Saanich Peninsula and the Western Communities decreased from $570,000 in July 2010 to $565,100 in July 2011.
The Western Communities by itself saw a drop in the median house price from $508,000 to $468,500 based on 500 sales that bracketed July 1 of each year.
The median for Victoria Core districts were up from $590,000 in July 2010 to $599,450 in July 2011.
Median prices fluctuations will vary from area to area. Do your homework on home values, or consult a knowledgeable source to assist you in your appeal.
So, get your appeal in quick as BC Assessment should have a lot of appeals to deal with this year. Most likely if you're looking at a 5% adjustment, they'll drop the assessment and save themselves the time it takes in the appeal board.
Why would it behoove a homeowner to seek a lower assessment?
If you have a lower assessment hopfully you would pay less taxes.
Say the tax rate for a home in Victoria is 0.0064.
On a $600,000 home that would be some $3,840 in property taxes each year. If your property was over assessed by 10 percent that would mean that you are over paying your property taxes by $384 too.
If you don't appeal your assessments, chances are BC Assessment will just add a factor to this years assessment to get next years. Which means you will again be over assessed next year too.
The appeal process is extremely important to the assessment process. The assumption is that home owners will appeal over assessed properties and bring the assessments in line with reality. If you don't appeal, then this years assessments would be considered correct.
On the other hand, there is the myth that a high assessment will assure you a high price when it comes time to sell the property.
Here's an example that I would argue to have your property assessment rolled back by 5%. If you live on Bay street, the recent addition of buses along the street has made ingress and egress to your property more difficult. Consequently, your property value would not have increased the same as properties situated along quiet residential roads in Fernwood.
That's a slam dunk 5% which could be a savings of a hundred bucks or more for you. And if you have a new bus stop in front of your home, you might go for 10% for all the garbage and litter that is dumped onto your property by the riders waiting for the bus, not to mention that it's your responsibility for snow removal.
For some reason the assessors I have dealt with here seem quite intransigent and opposed to just settling. I appealed twice in the last three years. The first time I had a slam dunk case. The second time a fairly strong case. Yet I had to go right through the appeal the first time and the second time I had to go to the PAAB (second appeal step). Both times I got worthwhile reduction in assessed value.
The appeals were a bit of work, but ultimately worthwhile
Totally agree with Just Jack. If you are over assessed now, you are likely to be over assessed for years into the future so the extra taxes will really add up.
Victoria is used as a training center for assessors. The appeal board is part of that assessor training too.
But the board is made up of everyday people not just assessors. So logic will prevail. The assessor has to prove his/her estimate is correct.
Now if your going for a major change of 15% or more, then you may want to hire someone to be with you during the process. You are entitled to see all the field notes and analysis that the assessor used. Sometimes you find obvious mistakes, such as your home is classified with a full basement when your only on a crawl space, or the square footage is wrong.
Fernwood continues to sell well...
The appeal process is extremely important to the assessment process. The assumption is that home owners will appeal over assessed properties and bring the assessments in line with reality. If you don't appeal, then this years assessments would be considered correct.
As I suspected, almost no one appeals assessments. This article says:
Over 98% of property owners in BC normally accept their property assessments without appeal from year to year.
and
BC Assessment stated, “As a percentage, less than one per cent of property owners have appealed their assessments for 2011.”
Last year most of the property assessments were below market value. During 2011 we have seen, as shown in this blog, how many properties are now trading below assessment. An increase in the assessed values will only mean more properties will be selling below assessed values. In 2010, it seemed that only a small fraction of properties were selling below assessment. In 2011 that percent has jumped substantially.
Putting this into an example you would have to ask yourself if you would appeal your assessments if:
Last year your home had a market value as at July 1, 2010 of $500,000 and your BC assessment was $450,000? I would think that 99 percent of the people would not appeal their assessment.
This year your home has a market value as at July 1, 2011 at $500,000 and your BC assessment is $550,000? I would think the number of people appealing their assessment will jump past one percent.
Flips are still selling well too. 3941 aspen in caddy bay just went for a cool $1.18M. Gees I thought the Oak Bay flips were overpriced. Anyone know how much this sold for originally ?
Looking back at home sales that occurred around July 1, 2011 in Greater Victoria. At that time approximately 26% of homes were selling below their assessed value. In the last few months that percentage has increased to 54%.
For condominiums that percentage of properties selling under assessment has grown from 48% to 60% in the same time frame.
Well we will see if there is a public uproar over the increase in the Assessment this year. With people being nickel and dimed from utility to electricity rates how much more will the public tolerate.
It may once again, be to a politically advantage to freeze the assessment at last years levels. That is, if your political party wants to be elected again.
"Flips are still selling well too. 3941 aspen in caddy bay just went for a cool $1.18M. Gees I thought the Oak Bay flips were overpriced. Anyone know how much this sold for originally ?"
$645,000 in 2007.
Last business day on 2011.
Any idea of the totals for the year and how this compares to last?
2007 = 8,931 unit sales
2008 = 6,519 unit sales
2009 = 8,096 unit sales
2010 = 6,546 unit sales
2011 = 6,050 approx. unit sales.
It will be the worst year for sales since 2000 and the worst year in terms of Total Sales $ since 2004.
Thanks Marko - that yearly total puts it into perspective well.
Marko said "It will be the worst year for sales since 2000 and the worst year in terms of Total Sales $ since 2004. "
This is with mortgage interest rates at the lowest level in Cdn. history!!
How will VREB spin these stats?
Answer - by not commenting on this data. The news release will just say December sales are slightly less than last December and prices are holding steady. Of course the usual statement that the Victoria market is balanced and stable.
Marko - You must grimace every time you have to give these clowns your member dues...
Well we will see if there is a public uproar over the increase in the Assessment this year.
I think you're misjudging the situation. If the newest assessments come in above market value, the home-owning public will, for the most part, a) not even recognize the over-assessment, or b) be pleased with the over-assessment.
With people being nickel and dimed from utility to electricity rates how much more will the public tolerate.
Believe me, the home-owning public has a high tolerance for being told that their property is worth a lot.
Higher property taxes, each year, is a given in the mind of 99% of owners, which is likely why only 1% of them bother to appeal.
Moreover, isn't it worth it to pay an extra $250 a year in taxes in exchange for a decent chance that a future buyer of your home ends up "overpaying" by perhaps tens of thousands of dollars due in large part to its high assessed value? This is a great risk-reward ratio. Combine two realtors, a high assessment, and a rich Alberta couple dead set on living in Oak Bay and what do you get?
I think its the water in Victoria.
When I first came to Victoria, I was surprised that people wanted their assessment high. And the number one reason was that they believed a higher assessment guaranteed them a higher price when it came time to sell.
Since I came from a much bigger city I put this down to either a lack of quality education in Victoria or that they came from English ancestry. Since my ancestry is partly Scottish, I have since come to know that we do have a good school system in Victoria.
How will VREB spin these stats?
The way they are mandated to do: positively.
The VREB is just like any other business or organization. It is their job to put out messages that positively impact the realtors they represent, and thus no one should be surprised when they do exactly that.
Some 2012 (price) predictions:
Going Up
+ insurance (health, car, employment)
+ utilities
+ taxes (income, property, payroll, gasoline)
(+ civil servant expense accounts)
+ unemployment rate from 7 to over 8%
+ vacancy rate to well over 5%
+ humility
Going Down
- Canadian dollar (and some unfounded pride)
- gasoline to under $1 a liter
- stock market under 10,000
- home prices down 10-15%
(either 2012 or 2013 will see the largest yearly drop until real prices bottom around 2020)
Happy new year. Thanks to the blog and everyone for all the great information.
Happy New Year to all. May 2012 be your healthiest and happiest.
Regarding the property assessments, most of my friends/family want a lower assessment (they want lower taxes and also don't want the city to get away with underhanded methods of increasing taxes), but they can't find the time in their hectic days to fight for it. So thanks to Just Jack for all the tips - very useful - I'll pass it on.
Also thanks to everyone for a great year of information sharing, discussion, and debates. All the best for 2012.
Marko - any unofficial numbers for the month?
"also don't want the city to get away with underhanded methods of increasing taxes"
Are people ever going to get it? There are no "underhanded" ways to increase property taxes because they are directly based on budgeted spending. Also people apparently aren't even reading the big type on their assessment notices which indicates that the city doesn't do them.
And thanks for the predictions for 2012 Dave, they look well thought out, and that 2020 real bottom is fairly well timed for my retirement :-)
Happy New Year everyone.
As for appealing property tax assessments I have done it twice. Both times is all I did was write a letter stating why I thought the assessment was unfair and both times I got a letter back stating that my appeal was excepted. The first time they lowered it by 50 thousand and the second time they lowered it by 30 thousand.
The first appeal was when they widened the highway by Millstream Road with all the blasting. The second time was when we had pulled a permit to add on 550sq feet to the house and had not completed the work yet and they had assessed as though the work had been done. So as for time, it really didn't take that much time to write each letter.
Happy New Year, everyone.
Sunday January 1, 2012 11:55am:
December
December
2011
2010
Net Unconditional Sales:
339
349
New Listings:
505
522
Active Listings:
3,780
3,252
Please Note
•Left Column: stats for the entire month from this year
•Right Column: stats for the entire month from last year
Good predictions Dave. F
or the future, can we stay from the comments such as 'civil service expense accounts'? I'm sure that if you asked most civil servants who travel, you'd find out that they would prefer not to. After around 2 work trips (either private or public sector) it isn't a luxury to stay in a hotel away from family.
It's irrelevant what people "prefer", "think", "believe". What is relevant is what they do.
Working in a national company, I travel sometimes. I don't like it either, but I still do it, and it doesn't change the fact it still costs a pile of money.
Provincial gov't has clamped down on all non-essential travel for the last couple years. All meetings are by tele/videoconference if at all possible.
Obviously does not apply to Christy Clark. For example:
Christy Clark flies to Kitimat, spins on LNG, flies out again
She is also not a civil servant.
Marko: Do you know how many condos and townhomes sold last week? On my pcs for Vic,OB,Esq,SE&SW in the price range of 260K - 575K, min 2 beds and 2 baths, I only had one townhouse sale and no condos. Thanks.
12 condos and 5 townhomes.
Marko - any official year numbers to share with us?
Some new assessments are coming up on evaluebc.bcassessment.ca....
Areas I am watching are showing an average drop in assessed value of 4.5%.
Lower end is a mixed bag. Some up a couple thousand, some down. Very small changes is all I see.
Interesting to see that the assessment of my Saanich West house has dropped by 6% - from $511K last year to $480K. This matches what I expected...
My assessment (Fairfield area) is down by a whole 0.2%. It's probably a bit above market value now, but not enough to warrant an appeal
“There are no "underhanded" ways to increase property taxes because they are directly based on budgeted spending.”
Maybe underhanded is too strong a word, but the fact is that when the market value of properties fall, cities often don’t reduce the assessments right away because they depend on the same amount of tax money coming in – there can even be a lag of a few years. Then, when they have to reduce assessments, they often face revenue shortfalls, so they raise tax rates to make up for it.
See this Wall Street Journal article …
http://online.wsj.com/article/SB10001424052702304521304576447940532071536.html
Fall in Property-Tax Revenue Squeezes Cities
“ 'property taxes aren't providing ‘the relief governments are looking for to get them out of their fiscal doldrums,' said Richard Ciccarone, chief research officer at McDonnell Investment Management in Oak Brook, Ill. …Property taxes had shown resilience until now because municipalities charge tax rates on assessed real-estate values that often lag market values by at least few years.
… Still, said Bob Kurtter, managing director of public finance at Moody's, local governments can offset declining home-value assessments by charging a higher tax rate.
For example, Washington's King County, home to Seattle, increased its tax rate 14.6% but saw its tax levy—or target for property-tax revenue—increase just 0.5% in calendar 2010, according to Moody's.”
TC has the story. Basically flat, with the outer areas down slightly and the core up slightly, as expected.
Good, this will make my continued comparison to assessment easier.
It's a lot easier to raise property taxes when home prices are increasing.
With home prices stagnate or declining then the municipal government has to be a little more crafty and instead of raising property taxes they would increase basic utility costs, like sewer, water and garbage rates.
Or they could restrict services by picking up the garbage once every two weeks.
I think we would have to change our name from the Garden City to the city of maggots then.
Oak Bay is already every two weeks for garbage pickup and our water bills are very high.
The whole assessed value and city tax rate is just a game where one government body can blame another for any increase.
We really don't need our properties in the city valued EVERY year. If the properties were valued every two years, then the city would just have to adjust the tax rate and add new homes.
And really, do we need to value the homes at all!. The larger the home the more city services it potentially uses. Bigger homes use more services so bigger homes pay more taxes.
The only appeals would be if your home grew or shrunk during the years.
It would also mean that slum lords that let their properties deteriorate would pay the same taxes as someone who keeps their property well maintained. Right now, our present system rewards slum lords with lower taxes and penalizes people who care about their homes.
What a great idea - a simpler assessment based on property size - and it would save a ton of money.
Also, since the city is getting creative about increasing taxes or cutting back on services, they need to get more transparent about where the money is going.
vreb taking much longer than usual to get their monthly and yearly stats out.
Yes please to simpler assessments and axing the BC Assessment department or most of it. Just make it the average of neighborhood sales prorated by land size or something similar that can be automatically calculated in 99% of cases.
MLS® 302542 (3022 Albina Street) sold on December 30th for $402K - more than 11% less than the previously assessed value of $454K.
Neighbours who want to sell will now have to reduce their asking price. Neighbours who are staying will be seeing a reduction in their home assessments next year.
"Oak Bay is already every two weeks for garbage pickup and our water bills are very high."
Amalgamate
VREB finally posts their spin ...
Last Half of 2011 Sees Stabilized Real Estate Market
While the real estate market started out sluggish in 2011, by mid-summer unit sales had stabilized. In December, annual sales for single family homes, townhomes and manufactured homes had increased, while condominium sales decreased by 15% compared to December 2010.
.
.
.
December marked fewer real estate sales in Greater Victoria, with a total of 339 homes and other properties selling through the Victoria Real Estate Board’s Multiple Listing Service® (MLS®), down from 482 sales in November. There were 349 sales in December 2010. Crabb notes that sales typically decline each December, reflective of the holiday season.
The numbers are out. It was a bad year.
2007 = 8,931 unit sales: 12.23%
2008 = 6,519 unit sales: (27.01%)
2009 = 8,096 unit sales: 24.19%
2010 = 6,546 unit sales: (19.15%)
2011 = 6,040 unit sales: (7.73%)
Total Sales $
2005 - $3,206,969,321
2006 - $3,373,171,099
2007 - $4,146,651,569
2008 - $3,111,882,746
2009 - $3,775,730,705
2010 - $3,239,493,835
2011 - $2,981,977,290
Went onto the BC Assessment site and went through the "E-Value" video.
BC Assessment is simply listing the sales that occurred. They are not telling you which ones that they may have relied on to value your property. Indeed, in my case, almost all of the properties that were listed had negligible similar physical characteristics to my home. Or simply put - they were NOT comparable sales.
The site is designed to baffle you with bullshit - rather than inform. It provides a long list of properties, most of which will have little in common with your home. There is no analysis and there is no reconciliation of how BC Assessment reached the value conclusion on your home.
Do I think the Assessment is accurate? In my estimation the assessment is between 10 to 15 percent off from market value. And, in my opinion, that is NOT an accurate estimate. But, the assessment is below the value I think the property is worth, so I would not appeal and BC Assessment can keep saying it has a high percentage of accuracy.
The question that comes to my mind is if BC Assessment even did a market comparison of properties. I think they did a mass computer analysis, but not a one-to-one or direct comparison. In that case, any appeal that provided a direct comparison approach to value, analysis and reconciliation would be more reliable - not necessarily more accurate - but more reliable than a stat run of the last 50 properties to sell in a given neighborhood.
If you decide to launch an appeal, it's necessary for you to visit the Assessment office and photocopy the assessors field notes and analysis. In that way you can question the assessor directly on what he/she did or did not do to reach their conclusion. And most of the time it will be what they did not do.
Crabb cites that housing prices have softened since December 2010, when the average single family home sold for $647,063, while in 2011 average prices fluctuated and now rest at $592,582.
That's an 8.4% decrease over the past year ...
I know my assessment is below market value: instead of 4 bedrooms only 3 are listed, apparently I have no bathrooms in the house, and the square footage is reported to be identical to my neighbor - whose house is 4 feet shorter and 6 feet less wide than mine. Shouldn't "zero" bathrooms be flagged and trigger a site inspection?
When I went to the Saanich municipal hall in 2002 (prior to purchase) to request a copy of the site and floor plans for my house - I was given a copy of a different neighbours house, with a completely different layout, etc.
Just Jack: I think that you are correct that a they do a "mass computer analysis, but not a one-to-one or direct comparison".
They have my home down as a two-bedroom when its a 3 bedroom. I also question the size of the home. There has never been an assessor through this home. The information is all from the original listing of the home when it was built some 20 years ago.
Slightly less one hundred dollars of your home taxes goes to BC Assessment each year for compiling the assessment roll.
Just checked our street, all the houses' assessment values dropped by about 1% ($6K-$8K), except two which increased by $11K and $13K. These two are our next door neighbors, and we know there is no change in their houses for the past year.
Go figure.
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