Mark Katz, Assessor South Fraser Region April 28, 2009 - PowerPoint PPT Presentation

Mark Katz, Assessor South Fraser Region April 28, 2009

Presentation Outline  A comment on BCA’s Business Cycle  Setting value  2010 Roll Values – Early indications  2010 Roll Non Market Change  Reporting Risk – 2010 Roll volatility  Legislative Changes 2

BCA Business Cycle – Work Programs  April – September o New Construction o Quality Enhancement Projects (QA) o Data Collection o Sales Editing  September – November o Market Analysis o Value updating o New Construction  Early December – Roll production cut-off  December – Audit / Client Report Preparation 3

How Do We Value Different Properties?  BCA Estimates Market Value as of July 1 st:  Most probable price that an unencumbered property would sell for on the open market if a reasonable amount of time is allowed to find a purchaser .  Based on sales of comparable properties at similar Highest & Best use  We don’t set the market but we do need to interpret the sales and reflect them in valuations. 4

How Do We Value Different Properties?  Sales on or around valuation date (July 1) are analyzed to develop common units of comparison  Units of comparison are used to value properties with similar characteristics.  3 main Approaches for Market value Properties: o Market Comparison o Income o Cost 5

A word about Highest & Best Use  This is the starting point of any valuation  All properties are valued based on the fact an investor will pay a value that reflects the highest return under current zoning, OCP, permitted use etc.  ICI - If present worth of the income stream on the current improvements does not support the existing land value as if vacant, the market value will not be lower than land value  Value in these cases will reflect vacant land value and potentially some holding value for the improvements. 6

Market Overview - Revisiting Bill 45  2009 assessment notices - contained values as at July 1 st 2007 (previous roll value ) and as at July 1 st 2008.  2009 Assessed value reflected the lower of these 2 values  For properties with non market changes - assessments reflected inventory as Oct.31/08 but market level at either July 1/07 or July 1/08 - whichever was lower  Approximately 94% of the time the lower value was July/07  Bill 45 is not effective for 2010 Roll 7

Market Overview (SFD/Strata)  Through out much of the 1 st half of 2008 residential values in most areas of BC were still increasing.  Markets in most areas peaked between March and June 2008 and then started declining.  Market increases to July/08 were not reflected on the 2009 Assessment Roll due to Bill 45  In a small % of properties values as of July/08 were lower than the 2008 Assessed values (July/07). These values were reflected on the 2009 Roll under Bill 45. 8

Market Overview (SFD/Strata)  SFD/Strata properties in most areas of the province have shown significant value declines since their peaks in 2008 - generally in the range of (10-25%)  Value declines vs. July/07 levels are more moderate, but as of March/April 09 still in the range of (5-10%) lower for most areas.  Current listing prices indicate we may see further declines in the market by the time all sales data supporting values around July 1/09 are analyzed.  Despite generally declining markets, some pockets may still experience increased assessments where the July/09 level is above that of July/07.  2009 Sales volumes declined dramatically in most areas, but have picked up in March/April. (50-60% over the same period in 2008)  Market values have leveled off in most areas in the past month. 9

SFD Sales Volumes 2007 - 2009 #Sales # Sales # Sales % Change Region Q1-07 Q1-08 Q1-09 Q1/08-Q1/09 1 – Capital 895 1,250 469 -62% 2 - Vanc. Island 1,496 1,325 488 -63% 3 - Vanc. Sea/Sky 1,754 1,447 633 -56% 4 – North Fraser 1,131 874 336 -62% 5 – South Fraser 2,078 1,900 514 -73% 6 – Fraser Valley 1,596 2,066 551 -73% 7 – Okanagan 1,395 1,471 503 -66% 8 – Kootenays 437 335 149 -55% 9 – Thomson Cariboo 646 475 217 -54% 10 – North 805 589 384 -35% 12,233 11,732 4,244 -64% Province 10

SFD Market Trend – Province (Jan 07 – April 09) Provincial Single Family Residential SAR by Quarter 1.200 1.100 1.000 0.900 0.800 0.700 0.600 2007_Q1 2007_Q2 2007_Q3 2007_Q4 2008_Q1 2008_Q2 2008_Q3 2008_Q4 2009_Q1 2009_Q2 Values 2007_Q1 2007_Q2 2007_Q3 2007_Q4 2008_Q1 2008_Q2 2008_Q3 2008_Q4 2009_Q1 2009_Q2 Count 12233 19484 18776 13923 11732 13045 8916 5104 4244 468 *2009_Q2 sales are only 01- Median of SAR 0.979 1.024 1.047 1.072 1.111 1.124 1.098 1.039 0.981 0.970 APR to 21-APR 2009

SFD Residential Market Trends Change Change Change Jul/07-Jul/08 Region Peak- Apr/09 Jul/07-Apr/09 (Not on 09 Roll- most cases) 1 – Capital -15% +8% -7% 2 - Van. Island -15% (04) / -23% (06) +9% / +12% -6% / -11% 3 - Van. Sea/Sky -14 (08) / -20% (09) -4% / -12% +9% / +6% 4 – North Fraser -15% +5% -10% 5 – South Fraser -11% (11) / -16% (14) +15% / +2% -4% / -12% 6 – Fraser Valley -13% +5% -7% 7 – Okanagan -23% (17/19) / -14% (20) -9% / -1% +9% / +6% 8 – Kootenays -24% (21) / -27% (22) +22% / +15% -2% / -11 % 9 – Thomps/Carib -15% (23) / -29% (24) +10% / +14% +7% / -14% 10 – North -30%(25) / -13%(26) / -9%(27) +20% / 0% / +11 -9% / -13% / -3 % -15% +7% -7% Province 12

Res. Strata Sales Volumes #Sales # Sales # Sales % Change Region Q1-07 Q1-08 Q1-09 Q1/08-Q1/09 1 – Capital 667 806 333 -59% 2 - Vanc. Island 533 436 170 -61% 3 - Vanc. Sea/Sky 2,807 2,430 846 -65% 4 – North Fraser 1,601 1,511 444 -71% 5 – South Fraser 2,672 1947 568 -71% 6 – Fraser Valley 1,366 1,396 409 -71% 7 – Okanagan 732 628 216 -66% 8 – Kootenays 188 205 53 -74% 9 – Thomson Cariboo 256 194 50 -74% 10 – North 153 68 22 -68% 10.975 9,621 3,111 -68% Province 13

Strata Market Trends – Province (Jan 07 – Mar 09) Provincial Strata SAR by Quarter 1.200 1.100 1.000 0.900 0.800 0.700 0.600 2007_Q1 2007_Q2 2007_Q3 2007_Q4 2008_Q1 2008_Q2 2008_Q3 2008_Q4 2009_Q1 2009_Q2 Values 2007_Q1 2007_Q2 2007_Q3 2007_Q4 2008_Q1 2008_Q2 2008_Q3 2008_Q4 2009_Q1 2009_Q2 Count 10975 12771 13009 11573 9621 8769 5362 3445 3111 261 *2009_Q2 sales are only Median of SAR 0.994 1.025 1.041 1.064 1.103 1.112 1.089 1.025 0.966 0.961 01-APR to 21-APR 2009

Residential Strata Market Trends Change Change Jul/07-Jul/08 Change Region Peak- Apr/09 Jul/07-Apr/09 (Not on 09 Roll- most cases) 1 – Capital -11% +7% -3% 2 - Van. Island -15% (04) / -10% (06) +10 / 15% -5% / +5% 3 - Van. Sea/Sky -16% (8) / -17 (9) -6% / -9% +9% / +7% 4 – North Fraser -13% +5% -7% 5 – South Fraser -16% (11) -13% (14) -6% / -8% +8% / +4% 6 – Fraser Valley -13% +5% -7% 7 – Okanagan -21 +8% to +10% -10% to -12% 8 – Kootenays Insuff. Data Insuff. Data Insuff. Data 9 – Thomp / Carib Insuff. Data Insuff. Data Insuff. Data 10 – North Insuff. Data Insuff. Data Insuff. Data -15% +7% -7% Province 15

Residential/Multi Family Development:  Most new residential housing and condominium / townhome projects are now on hold: o Projects previously funded are under construction o Saturated market for new product has created and imbalance in supply/demand o Cost and availability of financing  Sales activity is virtually non existent. We expect to see falling values for multi-family development land when trades occur  2008 / early 2009 sales for the most part reflect previous market conditions

Commercial Properties :  Number of sales transition reduced very significantly  Sales generally take a significantly longer period of time to complete the transaction by vendor/purchaser and process through LTSA.  Typically, changes in the market for these properties lag the changes we see in the residential Market  Many sales recently analyzed by our offices were negotiated in mid 2008 and do not yet reflect the impact of the current economic / financial environment.

Commercial Properties :  Current expectation is that rentals will be trending down and vacancy and capitalization rates trending up.  This could result in significant drops in the value for this type of property.  Decreases in 10- 20% are very possible.  Current uncertainty in market is expected to result in broader range of market transaction for similar properties. (Increasing COD’s)

2010 Non Market Change – Business Cycle  Most permit value (not on the 2009 Roll) is not processed until May – November: o Weather o Temporary Inventory collectors  Most appraisal staff/inventory collectors are deployed in other work during Dec - March: o Inquiry o PARP/PAAB o QA projects  BCA has implemented changes in its business cycle to support earlier completion/reporting of NMC 19

2010 Non Market Change Trends  City of Vancouver o Overall Permit value down approx 50% in 1 st quarter  City of Surrey: (Jan-Mar 08 vs. Jan – Mar 09) o SFD units down -62% o Apart/Townhouse Units down -90% o $ value residential down -79%  North Fraser Region (Burnaby/Coquitlam) o Value of permits for SFD’s down 20 -30%, o Strata down 30-40% o ICI down 40-50% 20