THE EFFECTS OF INCREASES IN ASSESSMENT VALUES ON THE HOUSING MARKET!2018-01-05 12:12:48 Posted By Amir Hamzehali
The 2017 property assessments in BC came as a big surprise to most people. The skyrocketing assessed values in some areas and for some types of properties created a mixed reaction among home owners.
Some home owners’ anxiety that the higher assessed values could mean higher property taxes this year was to a degree that the BC assessment authorities had to be quick to assure home owners that the higher assessed values does not necessarily translate into the higher property taxes.
By lowering the tax rate, the government can hold steady property taxes assuming the government’s required budget doesn’t change. The problem only arises when in some areas the assessed values of all properties doesn’t go up at the same rate. This could shift the tax burden to the properties that had a higher rate of increase in their assessed values.
Some other interesting effects of these increases in assessment values would be on the housing market! With no doubt, the first and foremost effect would be on the expectations of the home owners in terms of their property values. In a rising market, such as what we have experienced in last few years, the general public assumption is that the market value of the properties should always be higher than their assessed values by a large margin. Usually, higher assessed values for property sellers means higher price expectations for their homes, which may not be the case in a changing market like today! It would always take time for some home sellers to adjust their expectations and realize that the market values and the achieved sale prices sometimes could be close or even lower than the assessed values!
Let’s be hopeful that we won’t be witnessing a flooding of over priced homes for sale to hit the market this year, as this could slow down the number of property transactions for some time.