As we look forward to what is being predicted to be a hot and dry summer, the page turns on what was a hot and dry spring real estate market in our beautiful Beach neighbourhood. We experienced a further escalation in home prices these last three months, hitting new highs in sale values that continue to soar to levels that are really quite surprising.
That’s the hot side. The dry side was the continuing low inventory of homes for sale in the Beach, which, in tandem with steady low interest rates, have helped and encouraged these record high sale prices. If you’re selling in this market, it’s been fantastic, especially for those who are moving up, since there’s a glut of buyers eager to purchase their homes. But at the same time, there’s more move-up buyers than product, thus the bidding wars have invariably moved into the upper price range. It could be described as a vicious cycle.
Even if you’re not actively participating in the Beach real estate market, if you’re a property owner (or even to some extent a tenant) this escalation in property values has impacted you directly – and the proof was delivered in the mail this past May courtesy of the Municipal Property Assessment Corporation. I would guess that there were more than a few homeowners who opened the envelope to find their property assessment had increased quite dramatically.
The new property Current Value Assessments are dated from January 1, 2016, which has spared (for the time being) Beach properties from being assessed using sales figures from this latest spring run-up in prices. Still, if you’ve been attentive over the last few years, you probably have mixed emotions about these latest assessments.
On one hand you may fear that your property taxes will increase excessively, especially if you’re on a fixed income.
Your other reaction might be disbelief that your home is worth even close to what the assessment states. Believe it or not, it’s likely pretty close. In fact, the way the Beach market is churning, your value (if you were to sell on the MLS system) is likely more – way more – than the MPAC valuation.
Or you may have reacted with a wry smile and tucked the assessment notice in the drawer, quietly knowing that you’ve managed to slip under MPAC’s radar with a lower assessment than you believe it should be. MPAC’s four-year phase-in program will diffuse the sticker shock initially, and it’s the annual mill rate set by City Council that is the key to how much you’ll pay in property taxes. Your taxes aren’t about to double, but they will increase.
I wrote a couple columns in this paper about MPAC’s valuations way back in 2003 when they first started, and I helped many Beachers gather information and present a case against MPAC’s often wrong initial property assessments. MPAC had growing pains with that new assessment system, often changing their own criteria as to what contributed to value. Their “Assessment Experts” slowly learned the quirkiness of local real estate, and it seems MPAC has tweaked their local analysis to fit into our neighbourhood. The latest criteria that MPAC is using to calculate 85 per cent of their CVAs are based on five factors that are standard pillars of real estate valuations: location, living area, age of property, lot dimensions and quality of construction. MPAC doesn’t list how much weight each factor contributes, but I think it’s fair to say MPAC is finally getting its research in order.
These increased valuations have spread out to all corners of Toronto, and thus should spread the pain around. But there’s no getting around the fact the Beach is one of the most desirable neighbourhoods in our fair city, and the dirt under our sandals will continue to be seen as very valuable.
And why not? Take a minute and think about it: We live in a pretty fantastic city in a terrific part of a great country. And our little corner of the city is just outstanding! Why wouldn’t people from all over the world want to live here?
Of course, the way our real estate prices are increasing, being world-class will bring with it a different set of problems. And housing affordability and world-class property assessments may very well be on that list.
If you do have questions about your property assessment, I’m happy to speak with you free of charge and see if there’s a case to lower your assessment. Call my office at 416-690-5100, or email to firstname.lastname@example.org. Have a great summer!