Canada's 'housing bubble' deemed close to bursting

[st7860]

Originally Posted by kwoldtimer

I don't follow how that relates to who bought the property?

I also don't follow about the complaining about foreigners

[kwoldtimer]

Originally Posted by st7860

I also don't follow about the complaining about foreigners

I didn't complain about foreigners, I was just trying to understand the connection between the sale of a commercial property and the municipal tax revenue generated by the property.

[st7860]

One of, but not the only reason, that Vancouver real estate is funny is because residential property taxes are as little as one half to one third of those in many cities in Canada and the US. A $400,000 place would usually have taxes of less than $2500 a year for example.

[someone123]

Originally Posted by st7860

One of, but not the only reason, that Vancouver real estate is funny is because residential property taxes are as little as one half to one third of those in many cities in Canada and the US. A $400,000 place would usually have taxes of less than $2500 a year for example.

I think you are reversing cause and effect here. Assessments are done provincially and then the city adjusts its property tax rate such that it can afford to provide municipal services. It would be absurd for Vancouver to have a tax rate 3-4 times higher than other cities where the cost to provide police and fire protection, etc. is roughly comparable but where assessments happen to be much lower.

[someone123]

Meanwhile, BC's premier says:

Clark is satisfied with the current market and worries that if taxes on foreign real estate investors are implemented, “housing prices will drop.”

“That’s good for first-time home buyers but not for anybody who is depending on the equity in their home to maybe get a loan or use that to finance some other projects,” she said Tuesday.

You guys might not be able to afford a place to live, but I've got projects to get done! Those trips to Hawaii and botox injections don't pay for themselves!

[st7860]

Hmm then why does news come out periodically where commercial owners say they pay much more property taxes at a rate 3 to 4 times that of residences. Typically these articles would also cite neighbouring cities as having more fair tax rates. In other words some people consider Vancouver's residential tax rates to be artificially low. The city is gradually shifting more of the property taxes to residences but of course is doing it slowly.

[st7860]

Yes i heard about the Christy thing too. Also the prime minister said yesterday that Canadians should be careful with debt. So the 'vancouver needs us ' group on twitter and facebook is citing both of those articles as ammunition

[someone123]

Originally Posted by st7860

Hmm then why does news come out periodically where commercial owners say they pay much more property taxes at a rate 3 to 4 times that of residences. Typically these articles would also cite neighbouring cities as having more fair tax rates. In other words some people consider Vancouver's residential tax rates to be artificially low. The city is gradually shifting more of the property taxes to residences but of course is doing it slowly.

Many cities are like this, including cities with low residential assessments. This happens because commercial property owners make up a small part of the municipal-level voting population. The most vocal group tends to be homeowners.

[1overcosc]

Originally Posted by someone123

Many cities are like this, including cities with low residential assessments. This happens because commercial property owners make up a small part of the municipal-level voting population. The most vocal group tends to be homeowners.

Toronto is like this, and it's had the negative consequence of causing a huge amount of employment to set up in the 905.

[ssiguy]

How horrid dear Christy. Imagine anyone even suggesting that housing prices should drop in the most expensive housing market in the English speaking world.

Again this reinforces my point that foreign {usually dirty} money flowing towards real estate has become so essential to the Vancouver economy that now any slow down would crush it's economy and prove what most already know.........the emperor has no clothes.
This shows how real estate developers, agents, and foreign real estate buying has become so pervasive that it now also controls political institutions.

[st7860]

[QUOTE=ssiguy;7028713]How horrid dear Christy. Imagine anyone even suggesting that housing prices should drop in the most expensive housing market in the English speaking world.

Again this reinforces my point that foreign {usually dirty} money flowing towards real estate has become so essential to the Vancouver economy that now any slow down would crush it's economy and prove what most already know.........the emperor has no clothes.
This shows how real estate developers, agents, and foreign real estate buying has become so pervasive that it now also controls political institutions.[/QUOTE

So how do you suggest that the dirty money is making it past the dogs(literally dogs) at YVR?

[st7860]

http://www.vancitybuzz.com/2015/05/provi...ta-on-foreign-real-estate-investment-bc/

[lio45]

Originally Posted by someone123

I think you are reversing cause and effect here. Assessments are done provincially and then the city adjusts its property tax rate such that it can afford to provide municipal services. It would be absurd for Vancouver to have a tax rate 3-4 times higher than other cities where the cost to provide police and fire protection, etc. is roughly comparable but where assessments happen to be much lower.

Exactly. In fact we had that exact same discussion in this thread already. With that exact same guy.

Upon analysis, it turns out that water, sewer, garbage collection, police, fire, etc. costs about the same per sq ft or per dweller in Vancouver than it does everywhere else.

Taxes aren't cheaper, you're just paying more for the same house or condo than you would somewhere else, so the taxes seem cheap compared to the purchase price.

A 2,000 sq ft house in inner Detroit probably costs its owner within the same ballpark in yearly municipal taxes as a 2,000 sq ft house in Vancouver, but owning $3 million of real estate in inner Detroit (in other words, owning an entire neighborhood) will certainly cost you a hell of a lot more in yearly taxes than owning $3 million of real estate in Vancouver (one slightly larger-than-average well located house) will, and it's perfectly normal.

An entire neighborhood costs obviously much more yearly in water, sewer, road maintenance, fire, police, etc. than a single house... even though the cost of these services per dweller, or per habitable sq ft, might be the same, or even less.

[st7860]

For the same dollar in price Vancouver property taxes and costs are much lower than many other cities. For example a $320,000 property either downtown or the east side would typically have taxes of around $1000 per year. I did look up many random properties on zillow throughout the US, and a $320,000 property would often have a bill of double or triple.
https://www.biv.com/article/2014/9/vancouvers-low-tax-rates-hold-dark-side/
Vancouver has the second-lowest commercial property tax rate and the lowest residential property tax rate in Canada, based on a study of 10 major cities by the Real Property Association of Canada (REALpac), but what appears a good news story has a dark side, a local tax expert said.
“Seven per cent of the property owners in Vancouver – commercial building owners – pays 47% of all the property taxes,” said Paul Sullivan, senior partner with Vancouver appraisers Burgess Cawley Sullivan & Associates Ltd.

looks like the summer rate for water is similar but for winter/spring the vancouver rate is quite a bit less than the toronto rate.
http://vancouver.ca/home-property-development/metered-rates.aspx
http://www1.toronto.ca/wps/portal/contentonly?vgnextoid=a916ff0e43db1410VgnVCM10000071d60f89RCRD

[niwell]

Most people have a very basic misunderstanding of how property taxes work. Assuming that rates are set and the municipality sees just how much money it can get!

I guess it's not entirely intuitive that you determine the revenue required from property taxes to meet budget commitments and work backwards to determine rates from there given you know what the base assessment value of all property classes are.

Originally Posted by st7860

For the same dollar in price Vancouver property taxes and costs are much lower than many other cities. For example a $320,000 property either downtown or the east side would typically have taxes of around $1000 per year. I did look up many random properties on zillow throughout the US, and a $320,000 property would often have a bill of double or triple.

Case in point.

[lio45]

Originally Posted by st7860

For the same dollar in price Vancouver property taxes and costs are much lower than many other cities. For example a $320,000 property either downtown or the east side would typically have taxes of around $1000 per year. I did look up many random properties on zillow throughout the US, and a $320,000 property would often have a bill of double or triple.

Are you being dense on purpose?

Take a random existing typical house in Vancouver. See how much it costs in taxes per year to whoever lives there. Now jack it up, put in on an oversize load flatbed, and bring it to Oregon, or Manitoba, or Michigan, or Quebec, or Florida, or wherever. Buy a lot that's the same size as the Vancouver lot it was previously sitting on, in a neighborhood that's already composed of houses similar to it in terms of size, age, condition. Have a foundation poured, and lower the house to its new spot. Have the city appraise it and issue you a municipal tax bill. The yearly municipal taxes that you will pay to continue to live in your exact same house while enjoying approximately the same level of municipal services as you used to have in Vancouver but now in a location that's suddenly not Vancouver any more will NOT be significantly higher than what you were paying back in Vancouver.

[lio45]

Originally Posted by niwell

Most people have a very basic misunderstanding of how property taxes work.

As I explained in this very thread a few months ago (to st7860 -- which means that I should've been doing something else with my time back then!), when property values basically doubled in Sherbrooke over a couple years in the late 2000s and early 2010s, the city basically halved its tax rate. (Municipal evaluations and tax rates in Sherbrooke are updated every three years, so to be more specific, I'm talking about the new 2012 assessment compared to the previous 2009 assessment.)

Needless to say, I continued to write the City a yearly check for about the same amount as previously for the exact same bunch of downtown Sherbrooke properties.

"Woot, my taxes are now twice as low?" is what I should have said? Lol.

[st7860]

You don't live in BC or Vancouver right? Then explain why(in Vancouver) for people that plan to stay in their homes a long time it is said that those people do not want their property to increase in value because that will increase their annual tax bill?

[niwell]

Originally Posted by lio45

As I explained in this very thread a few months ago (to st7860 -- which means that I should've been doing something else with my time back then!), when property values basically doubled in Sherbrooke over a couple years in the late 2000s and early 2010s, the city basically halved its tax rate.

Needless to say, I continued to write the City a yearly check for about the same amount as previously for the exact same bunch of downtown Sherbrooke properties.

"Woot, my taxes are now twice as low?" is what I should have said? Lol.

Haha obviously!

Another example is the little known Provincial Land Tax in Ontario, which is basically property tax for remote areas of the province that aren't part of a municipality. I'm simplifying this a bit, but basically the revenue from this tax was kept constant for about 60 years. This meant that people's tax rates went down regularly, but they paid the same year after year (more or less, depended on the specific property).

Recently the rates were frozen as a very early step in recovering more revenue. Because assessed values increased, people started paying more in property tax. Now the rates themselves will be increasing, so the amount paid will increase both from the rate increase and assessed value increase.

[niwell]

Originally Posted by st7860

You don't live in BC or Vancouver right? Then explain why(in Vancouver) for people that plan to stay in their homes a long time it is said that those people do not want their property to increase in value because that will increase their annual tax bill?

Like most municipalities, I'm guessing Vancouver ups the revenue from property taxes most years to cover expenses. Taking that in mind, your property taxes will only increase above and beyond this base increase if your assessed value is increasing at a faster rate than the average in the city.

In Toronto you see people with increasing bills downtown because property values are soaring. But in some inner suburbs property tax is actually going down as assessed values are flat in those areas.