Someone asked me the other day where I thought BC property taxes & assessments would be in 2018. It was a pretty simple answer, up.
Local Governments salivate over property taxes. Let’s not kid ourselves, higher house prices are a tremendous tax suck for Governments. Higher house prices equals more tax revenues. Not to mention BC is home to the lowest property taxes in Canada, with the city of Vancouver leading the way. According to the city’s budget, property taxes are set to rise 3.9% as it would be unrealistic to raise yearly taxes by 10-30% each year despite assessments.
Sure enough, BC Assessment released a report yesterday highlighting further increases should be expected in 2018.
“The preliminary market analysis for 2018 property assessments is showing strong market conditions across most areas and property types in the province, with a few exceptions. Assessments for detached single family homes in central parts of Metro Vancouver, for example, will be relatively stable, while other parts of the province will see increases when compared to last year’s assessments.”
2018 property assessment highlights include:
- Typical detached single family homes are very stable in the Metro Vancouver areas of Richmond, Vancouver, the North Shore and Burnaby; showing nominal changes in the zero to five per cent range.
- Other areas of the province can expect greater increases of 10-20% for detached single family homes, particularly across the Fraser Valley, Vancouver Island and the Okanagan.
- The residential strata market (i.e. condos) is quite robust with typical changes expected to be in the 10-30% range across Metro Vancouver, Fraser Valley, Vancouver Island and the Okanagan; the higher end being notable in Metro Vancouver and Fraser Valley.
Expect much higher property taxes in 2018, including the detached housing market even though prices have since tapered off and appear to be dropping. (November Detached stats here).
Property Tax Deferrals Will Continue to Rise
Many homeowners are stretched thin, house poor and facing cash flow problems. Property tax deferrals have increased five fold in the past decade in the city of Vancouver and still growing.
In BC there were 10,000 deferrals in 2016, a 67% increase from 2015.
Reverse Mortgages Also Increasing
Meanwhile, reverse mortgages are also growing. A reverse mortgage is when a senior homeowner borrows against the equity in the home they own. The lender gives them money, and the interest quietly racks up behind the scenes. Unlike a Home Equity Line of Credit (HELOC), they don’t have to make payments on it. When they kick the bucket, your estate repays it back with interest.
With property taxes assessments in BC rising by an average of 30-35% last year and set to rise another 10-30% it could help anchor prices higher while also adding further costs to existing homeowners who are facing record high household debt to incomes of 168%.