Every few years when the province re-assesses our properties the newspapers fill up with a lot of hullabaloo about increasing property taxes. The past couple of weeks when we received our new assessment notices in the mail was no exception. The notices reflected an increase in our property values of some twenty percent over their previous values.
An increase of twenty percent in your assessment value does not translate into a twenty percent increase in property taxes. Your taxes will go up, that goes without saying, but not by twenty percent and not due to your assessment increase alone. Your property taxes are calculated by multiplying your assessment value by a tax rate multiplier. The tax rate multiplier also changes every year and it is the product of these two numbers that equals the property taxes you pay.
Property assessment values in the Province of Ontario are set by the Municipal Property Assessment Corporation (MPAC). MPAC is a not-for-profit Provincial Corporation who's role is to classify and value properties in the Province of Ontario. Your property assessment value is based on its location, lot size, living area, age and quality of construction. It is the province's estimate of your property's value as of a specific valuation date. In the case of this last assessment notice, your property's value as of January 1, 2008.
The tax rate multiplier is set by the municipality by dividing the amount of money it needs to collect by the total of all Property Assessment Values in the municipality. The resulting number is the tax rate multiplier. The tax rate multiplier is the same for all properties in your assessment classification. For example, all residential properties in Kitchener are subject to the same tax rate multiplier. In this way your property value assessment determines the proportionate amount of the municipality's required revenue that you are responsible for. In 2008 the Tax Rate Multiplier for residential properties in the City of Kitchener is 0.00140674. Multiply this number by your 2005 property assessment value to calculate you current property taxes.
Assessment Value X Tax Rate = Property Taxes
If all property assessment values increase by the same percentage, your proportionate share of the municipality's total tax base does not change. Your taxes should stay the same if the municipality's total demand for revenue doesn't increase. If your property assessment increases more than the average, your proportionate share increases and your taxes will go up. Likewise, if your property assessment value increases by less than the average, your proportionate share decreases and your taxes should go down.
When property value assessments increased 11.33 percent in 2005. My property assessment value increased 10.53 percent and my property taxes increased about 2.5 percent the following year. A below average increase in my assessment value resulted in a below average increase in my property tax bill.
Your 2008 assessment will be phased in over a four year period by adding a quarter of the total increase each year from 2009 and 2012. In my view, this makes no difference at all because it doesn't change your proportionate share. This is simply makes, what looks like a tax increase look like less of a tax increase. In reality there is no increase at all.
In summary, don't be alarmed if your assessment value is up twenty percent or so. That's the average increase property assessments in Kitchener-Waterloo and its pretty close to the average increase in actual property values between 2005 and 2008 also. Property assessment values are simply reflecting actual market conditions and unless your assessed value is out of wack, ie. Higher or lower than it should be relative to other properties, then you have nothing to be concerned about. In fact a high assessment value may be an advantage, as a high assessment values are often used to defend higher sale prices when selling.
The average sale price of all residential properties sold in Kitchener-Waterloo and area held steady at almost $266,000, down only slightly from last month's average of $267,500 and up from last year's overall average of nearly $248,900. Industry experts from RE/MAX and CMHC predicted average price increases of 5 and 6.2 percent respectively for 2008. Year-to-date average sale prices for all residential properties sold through the Kitchener Waterloo Real Estate Board are up 6.7 percent to $265,500.
While sales results were mixed depending on the particular price range, demand for higher priced homes remained buoyant in August, with sales of properties in the $400,000-plus jumping 26 percent.
Karen Shartun, President of the Kitchener Waterloo Real Estate Board says, "Properties in lower price ranges experienced a more general decline in sales. For example, the number of homes selling for between $200,000 - $225,000 were down almost 50 percent." This sounds like a decline, but not really... Properties in these lower price ranges have increased in value and are now selling in higher price ranges. Buyers at or around the $200,000 mark are becoming increasingly frustrated with the lack of decent product at this price point. Multiple offers and "bidding wars" remain common in this market.
The summer is traditionally a slower real estate market while buyers, sellers and agents are distracted vacations and other summer activities. Fall is a great time to be in the market for both buyers and sellers, second only to the Spring Market. More sales activity means faster sales for sellers and more properties to choose from for buyers.
If you want to get moved this year or early next year, now is the time to get the ball rolling. Give me a call or send me an email. I'm never too busy for your business or referrals.
I attended a presentation this morning by a Market Analyst from Canada Mortgage and Housing Corporation entitled 2008 Housing Market Outlook. I just thought I'd summarize the highlights from my notes. I apologize that I didn't keep track of the exact numbers, but the main points are bulleted below.
In order to provide some context for these numbers I offer the following:
Prices appear to be levelling off, but it appears that average prices are not expected to decrease in the immediate future. An increase of 5-6% for local house prices in 2008 overall would seem to be consistent with the opinions of government and industry experts. Also consistent with these opinions is a modest decline in the number of properties to be sold in 2008.
For an up-to-date market evaluation and a detailed analysis of how market forces are affecting your real estate choices, call me today.
Well, 2008 is off to a great start! Sales of residential properties in Kitchener-Waterloo and area last month mirrored January 2007 results, positioning the local real estate market for another strong sales year.
There were a total of 381 residential sales last month recorded on the MLS® system of the Kitchener-Waterloo Real Estate Board, just over the 379 homes sold in January 2007. Relative to December 2007, sales jumped more than 25 percent last month.
Sales results in January point to continued market strength. While the market may be poised to keep pace with the record-setting sales of 2007, it is too soon to forecast whether last year's results will be matched or exceeded.
Higher-priced homes continued to sell well last month, with 35 properties selling for more than $400,000, compared with 19 sales one year ago. Sales results across other price ranges showed varying degrees of strength, with mixed results being reported for some price ranges, largely due to a decline in the sale of single family detached properties relative to January 2007. Sales of condominiums in January were particularly strong with 67 sales marking a 56 percent increase.
The total dollar volume of residential properties purchased last month was $100 million, up 8.3 percent from last January, resulting in higher average sale prices. Overall, the average sale price of all residential properties sold last month jumped 6.1 percent to $263,860.
While January saw a slight increase in new listings, the overall supply of residential properties available for sale was down almost 20 percent relative to January 2007 to 1,553 active listings. There is currently a 4 month supply of homes on the market.
Solid residential sales in January continue the healthy market that home buyers and sellers have enjoyed for the past 10 years. The results for the month set the stage for strong sales in 2008.
The 6,808 homes sold in Kitchener-Waterloo and area last year set a new record for total annual sales in the history of the Kitchener-Waterloo Real Estate Board. Last year's results were the continuation of a steady climb in sales since 1990 (3,501 total sales).
Dollar volume of all residential real estate sold last year jumped almost twenty percent to $1.7 billion compared with 2006, reflecting continued strong consumer confidence in the local real estate market.
The volume of sales in price categories above $200,000 experienced the greatest increases. The greatest percentage sales increase was for homes selling for $750,000 to $1 million. The most active market segment was for homes selling in the $200,000 to $250,000 price range.
Despite the record unit sales for the year, sale price increases were relatively tempered. The average sale price of all residential real estate sold in 2007 increased 5.6 percent to $248,879. Single family detached homes sold for an average price of $283,080 last year, an increase of 5.2 percent.
Despite strong consumer demand for higher-priced properties, the supply of homes for sale remained constant, with 9,646 new listings this past year topping the supply of homes for sale in 2006 by just four properties.
Tania Benninger, President of the Kitchener-Waterloo Real Estate Board says, "Home sales in 2007 were strong throughout the year as consumer interest went unabated. The strong sales performance locally reflects strong residential sales throughout Ontario and across Canada." Benninger noted that sales throughout 2007 have been strong across all price categories above $200,000, a trend that is likely to continue into 2008. While the sale of single family detached homes continues to drive the market, sales of townhouses, condominiums and semi-detached houses all experienced strong growth in 2007 as well.
Continued affordability, low interest rates and a dynamic local economy that has produced the highest employment rate in the country have created a market with a strongappetite for home ownership.
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