Decreasing property assessments and the changing face of the Rossland real estate market
Assessment notices arrived in Rossland residents’ mailboxes this week and the general result across the board in Rossland was a 5.15% average drop in assessed value of residential properties in Rossland. In total, Rossland’s assessed tax role decreased from $624 million to $601 million. Early analysis and statistics tend to show a continuation of the real estate market downturn since its high in 2007-2008. Recent statistics since November, however, are indicating what could be the beginning of a recovery in the local market.
“It’s tough to say exactly what causes the drop in value,” explained Dennis Hickson, deputy assessor for BC Assessment. “It’s perhaps likely an oversupply of inventory in the market. Rossland was booming until two or three years ago and had a lot of product coming on the market with the new lots at the golf course and new condos at the ski hill. There’s likely now an oversupply of housing product on the market that is lowering real estate sale prices overall.”
The assessment values themselves are adjusted from year to year based on the statistical sales information from the previous year. The assessment board analyzes the previous year’s sales and then relates them to the assessments from the one before that. Those sales then indicate whether the previous assessment was too low or too high based the new sale price. From there the board adjusts their values based on that analysis of comparable sales.
“The downturn in the real estate market certainly hurt Rossland a little bit,” added Hickson. “A lot of people who buy in Rossland were buying for recreational purposes or investments and when there is a downturn in the market the first people to drop out are recreational home buyers and investment home buyers. The bloom of that boom has certainly come off in the last couple of years.”
Rossland’s real estate stats from the last year fall into line with that statement. For 2009 on average there were 50 to 60 detached houses on the market in Rossland at any one time. At the height of the market in 2007-2008 the number of homes on the market hung around ten at any one time.
“The second something was listed it in 07-08, it would sell,” commented Christine Albo of Century 21. “We were getting offers before the listing papers were even signed. It was crazy.”
Albo also noticed that the kind of person who is buying in Rossland and what they are buying has changed fairly dramatically in the past two years.
“We’re not seeing nearly as many investors as we used to see. There’s been basically a 99% drop in American clients. We have seen an increase, however, in people moving to town from out east,” added Albo. “The one place we’re not seeing sales at all is in the condo market. People aren’t buying condos like they used to. It’s the same with lots. “
In what could be interpreted as a positive trend, more people are buying homes in Rossland over the last year to live in according to Albo. Fewer people are buying vacation homes or investment properties.
Since November there has been a spike upwards again in the real estate market; however it has been almost entirely lower-end priced single family detached houses under $300,000.
“Just in the last month since November our housing inventory is down to 29 houses. It’s a really good improvement. We all have a lot of buyers with not a lot of options to choose from in town,” explained Albo.
While the single family home listing inventory has been cut in half over the past month, the market remains flooded with lots and condos with roughly 45 condos and 45 lots currently up for sale.
Concurrently, the units that are selling are in the low range of the price spectrum. Of the 52 houses sold in Rossland in the past year only six were priced above the $350,000 mark.
Price-wise the market correction appears to be leveling out after the crash of 08-09.
“We saw a drop in Rossland of around 15 to 20% in sale prices from the peak in 07-08,” added Albo. “In the last year that has leveled off and we say maybe a 5% drop this year if anything at all. The trick right now is for a house to sell it has to be priced perfectly. If it’s over-priced it will sit on the market for a long time. We have the buyers but they are doing their research and know what they are looking for.”
What does the drop in assessed value mean to the average Rossland home owner in terms of taxes? In terms of actual dollars they will pay, the assessed values don’t directly affect that. In developing the City tax rates each year the City first completes its financial plan which is to be approved by council. From that financial plan, the budget is set for the current year and the amount of money the city will spend in the year is determined.
When the final dollar value of tax dollars the city needs to raise is known it is distribute to the various classes of property (residential, industrial, farm, commercial etc.) In Rossland 87% of the City’s taxes come from residential property tax so the City divides 87% of the tax revenue needed by the number of households to set the annual rate. So while decreased assessments (assuming no change in annual budgets) will mean a higher tax rate, the total dollar value collected remains the same.
So while BC as a whole this year hit a new high of just over $1 trillion in property assessments, Rossland has seen its first drop in value in at least the last five years.
If you are concerned with your properties assessment the City and the BC Assessment board encourages you to file an appeal promptly before January 31tst After January 31st BC Assessment calculates their results and sends out the annual tax roll back to municipal governments to set tax rates.