Greater Victoria’s homes in 2008 has climbed to $83.7 billion
Region’s homes worth $83.7 billion
Value goes up almost $10 billion in one year; more than 500 homes tip over the $1-million mark
Andrew A. Duffy Times Colonist January 3, 2008
The assessed value of Greater Victoria’s homes in 2008 has climbed to $83.7 billion, an increase of nearly $10 billion from last year’s roll, according to figures released yesterday by B.C. Assessment.
The numbers, based on property market values as of July 1, 2007, reflect a steady increase, according to Brian Hawkins, assessor for the region. The majority of homes in the region will have increased by between eight and 12 per cent, slightly off last year’s average of 15 per cent.
“It’s been basically the same story here for the last five years,” said Hawkins. He credits the continued strength in the market to the capital region’s being a “desirable location,” as well as the stable mortgage rate and low unemployment rate.
The West Shore recorded some of the biggest increases in the region, with average increases between 10 and 15 per cent, while waterfront and acreage properties jumped up to 25 per cent.
The increased values pushed 518 homes past the $1-million mark in 2008. There are now 2,864 Greater Victoria homes valued at more than $1 million, led by Oak Bay with 921, North Saanich with 551 and Saanich (school district 61) with 548.
“It shows B.C. is a sound place to invest right now,” said Rudy Nielsen, CEO of Landcor, a Vancouver-based real-estate analysis company. “You won’t see the roll get smaller anytime soon.”
Nielsen said migration and U.S investors are still helping drive the market by buying up property that they see as a bargain. “Our house prices are still cheap relative to prices around North America,” he said, noting B.C.’s housing markets might ebb and plateau but they’re unlikely to decline.
However, real estate agents and home builders still expect a slow start to the year — although they disagree on the effect the release of assessment data will have.
“Definitely, people look at that and realize houses are getting expensive, and it does slow the market down,” said Steve Copp, president of the Victoria chapter of the Canadian Homebuilders Association. “It takes a few months for purchasers to get used to [the prices] and they eventually realize they just have to get in and buy.”
Pat Parker, an agent with Century 21 Royal Victoria Realty, downplayed the assessment effect, noting the weather could play a bigger role. But he did say homeowners get a little excited to find out their homes are worth more than they thought. “If they are selling, then they may try to adjust their prices if it’s in their favour.”
But that is not always the best idea. According to Tony Joe, president of the Victoria Real Estate Board, if a home wasn’t selling in December at a lower price, it won’t move any faster in January using a sticker price based on a new assessment.
He points out the assessments, which are based on sales figures and other factors determined in July, remain a reflection of where the market has been — not where it will go.
“But [real estate agents] will definitely get a lot of phone calls in the first two weeks of January with people asking, ‘Is this truly what my home is worth?’ ” he said.
The other question on many minds is the effect of the assessment on municipal tax rates, which will be set in the coming months.
Saanich Mayor Frank Leonard said it is a factor in setting the rate, but an increase in assessment rates does not necessarily mean an increase in taxes.
“It affects how the pie is divided but it doesn’t change the size of the pie,” he said, explaining that homes assessed well above the average increase will see a higher than average tax rate, and those below the average would see a decrease.
Property owners who feel that their property assessment does not reflect market value as of July 1, 2007, or see incorrect information on their notice, should contact B.C. Assessment. If they feel their concerns require further attention, they must submit a notice of complaint by the end of this month to get an independent review by a Property Assessment Review Panel.
Price lift confirms homeowners’ faith
But financial experts say most people shouldn’t leverage principal residence
Andrew A. Duffy, Times Colonist January 03, 2008
Kim Linkert, who along with wife Karen bought a $210,000 Montrose Avenue home in 2001, noticed his home is now assessed at $473,000.
The impressive return on investment didn’t come as a surprise to Linkert, who tends to keep a close eye on his investments, but did reinforce his belief that real estate is one of the best investments you can make.
“My theory, which a lot of people also believe, is my Nortel (stock) can always go to zero, but my house never will,” he said, noting the increase in value means increased equity and the chance to take advantage of it.
“I think we’re all pretty happy to see our houses going up in value.”
Most of Greater Victoria’s homeowners will see an increase of between eight and 12 per cent in the assessed value of their homes if they check the assessment authority’s notices in the mail over the next week.
“Most homes in Greater Victoria are worth more on this year’s assessment roll than they were on the 2007 assessment roll,” said Brian Hawkins, assessor for the region. He noted that the increases are likely to be modest for most of the region, though West Shore properties could see increases between 10 and 15 per cent, while acreage and waterfront properties are likely to see increases of as much as 25 per cent.
For Linkert, the increased equity — or paper wealth — in his home is unlikely to change his investing or spending habits in the short term.
“Probably not this year as I’ve taken as much equity out of my home as I’m comfortable with right now and I have that working for me,” he said, noting he’s leveraged his home to invest in property around Vancouver Island and across Canada. “But I’m very happy to see (my home) going up because in the future I may leverage my house even more.”
Patrick McKinty, financial planner with Scotiabank in Sidney, said using your principal residence as leverage to invest is not for everyone as it requires a savvy investor who understands risk.
He said the majority of his clients won’t opt to use their increased equity to either invest or spend on new toys — using their homes as a form of chequebook when they see an increase in their assessment.
“When their homes go up, it does have an effect, they do ask questions,” he said. “But as a general rule, I don’t see a lot of knee-jerk spending.”
“I wouldn’t suggest that anyone leverage their principal residence to the max. First off, you need somewhere to live and it comes with additional risk,” he said.
“If you start making decisions to alternate your budget based on the fact the value of your home has gone up, it could affect the rest of your financial plan.”
