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

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Mark Katz, Assessor South Fraser Region April 28, 2009

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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

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BCA Business Cycle – Work Programs

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

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How Do We Value Different Properties?

BCA Estimates Market Value as of July 1st:
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.

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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:

Market Comparison
Income
Cost

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A word about Highest & Best Use

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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.

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Market Overview - Revisiting Bill 45

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2009 assessment notices - contained values as at July 1st 2007

(previous roll value ) and as at July 1st 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

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Through out much of the 1st 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

n the 2009 Roll under Bill 45.

Market Overview (SFD/Strata)

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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.

Market Overview (SFD/Strata)

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SFD Sales Volumes 2007 - 2009

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Region #Sales Q1-07 # Sales Q1-08 # Sales Q1-09 % Change 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%

Province 12,233 11,732 4,244

64%

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SFD Market Trend – Province (Jan 07–April 09)

0.600 0.700 0.800 0.900 1.000 1.100 1.200 2007_Q1 2007_Q2 2007_Q3 2007_Q4 2008_Q1 2008_Q2 2008_Q3 2008_Q4 2009_Q1 2009_Q2

Provincial Single Family Residential SAR by Quarter

Values 2007_Q1 2007_Q2 2007_Q3 2007_Q4 2008_Q1 2008_Q2 2008_Q3 2008_Q4 2009_Q1 2009_Q2 *2009_Q2 sales are only 01- APR to 21-APR 2009 Count 12233 19484 18776 13923 11732 13045 8916 5104 4244 468 Median of SAR 0.979 1.024 1.047 1.072 1.111 1.124 1.098 1.039 0.981 0.970

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SFD Residential Market Trends

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Region Change Peak- Apr/09 Change Jul/07-Jul/08

(Not on 09 Roll- most cases)

Change Jul/07-Apr/09

1 – Capital

15%

+8%

7%

2 - Van. Island

15% (04) / -23% (06)

+9% / +12%

6% / -11%

3 - Van. Sea/Sky

14 (08) / -20% (09)

+9% / +6%

4% / -12%

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% / +6%

9% / -1%

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%

Province

15%

+7%

7%

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Res. Strata Sales Volumes

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Region #Sales Q1-07 # Sales Q1-08 # Sales Q1-09 % Change 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%

Province 10.975 9,621 3,111

68%

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Strata Market Trends – Province (Jan 07–Mar 09)

0.600 0.700 0.800 0.900 1.000 1.100 1.200 2007_Q1 2007_Q2 2007_Q3 2007_Q4 2008_Q1 2008_Q2 2008_Q3 2008_Q4 2009_Q1 2009_Q2

Provincial Strata SAR by Quarter

Values 2007_Q1 2007_Q2 2007_Q3 2007_Q4 2008_Q1 2008_Q2 2008_Q3 2008_Q4 2009_Q1 2009_Q2 *2009_Q2 sales are only 01-APR to 21-APR 2009 Count 10975 12771 13009 11573 9621 8769 5362 3445 3111 261 Median of SAR 0.994 1.025 1.041 1.064 1.103 1.112 1.089 1.025 0.966 0.961

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Residential Strata Market Trends

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Region Change Peak- Apr/09 Change Jul/07-Jul/08

(Not on 09 Roll- most cases)

Change Jul/07-Apr/09

1 – Capital

11%

+7%

3%

2 - Van. Island

15% (04)

/ -10% (06) +10 / 15%

5%

/ +5% 3 - Van. Sea/Sky

16% (8) / -17 (9)

+9% / +7%

6% / -9%

4 – North Fraser

13%

+5%

7%

5 – South Fraser

16% (11) -13% (14)

+8% / +4%

6% / -8%

6 – Fraser Valley

13%

+5%

7%

7 – Okanagan

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+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

Province

15%

+7%

7%

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Residential/Multi Family Development:

Most new residential housing and condominium / townhome

projects are now on hold:

Projects previously funded are under construction
Saturated market for new product has created and imbalance in

supply/demand

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

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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.

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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)

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2010 Non Market Change – Business Cycle

 Most permit value (not on the 2009 Roll) is not processed until May – November:

Weather
Temporary Inventory collectors

 Most appraisal staff/inventory collectors are deployed in other work during Dec - March:

Inquiry
PARP/PAAB
QA projects

 BCA has implemented changes in its business cycle to support earlier completion/reporting of NMC

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2010 Non Market Change Trends

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

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2010 Non Market Change Trend

Vancouver Island Region (Nanaimo/Courtenay)
Permit value down approximately 50%
City of Kamloops:
Residential permits down approx 60%
SFD units down approx 85%
Nelson
Residential permits down approx 68%
Trail
Residential permits down approx 54%

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Roll Stability and Reporting Risk

 History generally indicates the Assessed value tax bases provided by BCA are very stable  Factors impacting 2010 Roll Risk:

Reduced Sales activity to support valuations
Economic Environment - Market uncertainty

makes analysis of sales transactions more difficult

Rate of change of Roll can result in higher

portion of tax base at risk

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Roll Stability and Reporting Risk

 To assist in planning talk to your Regional Assessors about risk to your rolls.  Risk to 2010 Completed/Revised (PARP)

Impacts Initial tax rate estimates
Hot Spots
Farm value subject to reinstatement

 Changes subsequent to the Revised Roll

Outstanding PAAB Risk
Non PAAB Supplementary Changes

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Legislated Changes

 Legislative change could be dependent

n outcome of May 12th election

 Bill 45 applied only to the 2009 Roll  Valuation date 2010 Roll = Jul 1/09

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Legislated Changes

 Farm Assessment Review Panel Established in 2008

Has been meeting & receiving Input
Panel report expected mid summer
Possibility government could act on some

recommendations (or look at other options) in time for 2010 Roll implementation

Expect changes to be limited given time

frame for implementation

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