Drop in BC home assessments no big deal
BC Assessments dropped in some areas.
So, here's a question:
If I have a lollipop I bought for 25 cents but someone comes by that loves the look of it and offers me 50 cents, does it mean it's really worth 50 cents?
Does it mean I could sell another one to someone else for double as well? And if I can only get 40 cents the second time around, can we say its value has gone down?
Welcome to the world of Vancouver real estate.
The assessments that BC Assessments do are there to tell us what our homes were “worth”—or what they probably would have sold for July 1 of last year.
That information is used effectively for property tax purposes. That information is effectively useless in terms of determining what your home is worth now.
As anyone in the West side will tell you, six months later you can be in a whole different market. Over the last few years, certain areas of Vancouver and West Vancouver had desirable properties—let's call them “lollipops”. People came and paid, at times, ridiculous prices for them. Assessments rose like crazy in response and listing prices kept going up.
In the last few months, the wave has subsided. Why weren’t the prices falling? Discreet private buyers? Stubborn sellers? Finally we see something in print, a BC assessment that says some areas numbers are down.
Real estate agents and the public alike have watched recreational property decline, so it's really about time the assessment reflected that. But I don’t understand that it should be any surprise that some areas in Metro have come down 1 to 15 per cent.
There are two issues athand here: first, what does the assessment mean? Second, does this signal real estate prices tanking in BC?
Ten years ago, a giddy public watched the “ value” of their houses go up when the assessments arrived. Now we are happy when they go down, because it does not dictate market value. It is rather a chance at lower taxes if, by luck, your house went down disproportionately to other houses in the area.
In 2008, when the sky seemed to be falling and prices started to plummet—albeit for only about two months—listings kept piling up.
This is what is different now.
The amount of sales in the fall of 2012 are very near 2008 numbers but so far people aren’t rushing to list their homes, so prices are staying pretty steady with slight declines in some areas. We used to call it a buyer's market but there really aren’t many people buying, so I suggest we come up with a new name.
Those that are buying are savvy and will negotiate hard in this type of market. They want a deal.
The assessment is only relevant to them because they do not want to pay that amount, let alone more than it. Eventually prices will have to come down,(unless we keep letting people come in with fat wallets) so what we hope for is a slow decline. A gentle roll down to numbers that the average person can aspire to.
However, the BC Assessment is a bar that we can use “priced below assessment” is what we used to say, and perhaps now the assessments have just caught up. What will be interesting to see is if from now on will we be seeing sell prices at near-assessed value, or if this will actually help bring prices down further as the buyers want to see the “ price below assessment”.
I believe as long as interest rates stay low, Vancouver is desirable enough that people will want to own a piece of it. As well, we will see new ways to bring in home ownership for the average folk. Stay tuned for “triplex style” housing on single lots and more, maybe smaller laneway homes to gently increase housing density and keep neighborhood character.
What we need is diversity in housing, not just a massive single family dwelling housing stock, to weather the storm. That way as certain sectors of housing increase or decrease we can downsize or upsize in a market.
In the meantime, I have no intention of selling. So to the horror of my kids, my half-chewed lollipop looks like an episode of Sandford and Son and our house is the lowest assessed one on the block.