5833 replies to this topic

[LeoVictoria]

A house in Oak Bay with an assessment of $839k was listed at $775k and then reduced to $750k before it sold. What it sold for I don't know but it was obviously under assessment and that's in Oak Bay.

Frankly I don't think BC Assessment values mean anything, its not like they come into the house to verify what its like inside. Is it an 80s kitchen or new with quartz counters and a Wolf stove and Sub Zero fridge? Wall to wall carpet or expensive mahogany wood floors? Crown mouldings? Quality bathroom fixtures or something from Costco?

They do mean something. They are the mostly automated valuation as of July of the previous year. Because they are automated they are most accurate if the property is in average condition and and doesn’t have any unique stigmatizing or enhancing attributes that the model doesn’t take into account.

As a group, assessments are pretty good if you know what they measure. Also if an assessment is particularly far off on the high side often the owner will appeal it and bring it back to reality so there is some degree of crowdsourced intelligence built into the system

[DavidL]

They do mean something. They are the mostly automated valuation as of July of the previous year. Because they are automated they are most accurate if the property is in average condition and and doesn’t have any unique stigmatizing or enhancing attributes that the model doesn’t take into account.

As a group, assessments are pretty good if you know what they measure. Also if an assessment is particularly far off on the high side often the owner will appeal it and bring it back to reality so there is some degree of crowdsourced intelligence built into the system

 

There's a sliver of an argument that the metric is useful across an asset type in a broad geographic region, otherwise I'm with Marko on this, assessments are a useless metric for a specific property.  Remember that real estate is not local, it's hyper-local and averages are anathema to accuracy.  At best they're 6 months out of date, at worst close to 18 months.  High variability in assessed values across similar properties necessarily means low reliability.  You have access to the data, pick any neighbourhood you like, any type of property, and run the sale price between Jul 1-15th of any year against its subsequent assessment year and tell me what sort of variability you get.  The last several years when I've run them I get a representative range from -20% of assessed to +20% of assessed, while discarding outliers.  Marginally useful in describing a general relationship to assessed but completely useless in ascribing a relationship to assessed for a specific property.

Edited by DavidL, 25 September 2018 - 07:47 PM.

[LeoVictoria]

There's a sliver of an argument that the metric is useful across an asset type in a broad geographic region, otherwise I'm with Marko on this, assessments are a useless metric for a specific property.  Remember that real estate is not local, it's hyper-local and averages are anathema to accuracy.  At best they're 6 months out of date, at worst close to 18 months.  High variability in assessed values across similar properties necessarily means low reliability.  You have access to the data, pick any neighbourhood you like, any type of property, and run the sale price between Jul 1-15th of any year against its subsequent assessment year and tell me what sort of variability you get.  The last several years when I've run them I get a representative range from -20% of assessed to +20% of assessed, while discarding outliers.  Marginally useful in describing a general relationship to assessed but completely useless in ascribing a relationship to assessed for a specific property.

Sure thing. For the week before and after July 1, 2017. Sales of single family detached $800k-1.2M in the core (normal houses in other words).
The process is onerous, but I did 15 of them.
Worst error: 11%
Average error: 1.6%

One would expect the error to be smaller on condos which are more uniform.
So like I said, assessments are not good on individual properties, but pretty good on properties as a group.



You also have to remember that the assessment is the province's best guess at market value. That is not something that can be strictly nailed down. Just because a place sells for some price does not mean that is market value. As you are well aware, an irrational buyer can always pay more than market value, or an irrational seller can accept less.

Edited by LeoVictoria, 25 September 2018 - 08:39 PM.

[Matt R.]

The house we bought last year didn’t have a WETT certified stove, the seller literally needed to BRICK UP the fireplace in order for us to get insurance for our mortgage. Cinder block bricks! Lol

The one we are hoping to close on this week needs five figures worth of septic work, the sale price reflects that.

Rural is weird.

Matt.

[tjv]

^5 figures is pretty normal for a new septic plant.  My engineered package treatment plant is pretty big and the quotes all came back in around 35k, I hired my own septic engineer and did it myself for 20k.

 

I think some BC Assessments are pretty good, but it would be pretty irrational at purchase time to compare the list price with the assessed price

[DavidL]

Sure thing. For the week before and after July 1, 2017. Sales of single family detached $800k-1.2M in the core (normal houses in other words).
The process is onerous, but I did 15 of them.
Worst error: 11%
Average error: 1.6%

One would expect the error to be smaller on condos which are more uniform.
So like I said, assessments are not good on individual properties, but pretty good on properties as a group.



You also have to remember that the assessment is the province's best guess at market value. That is not something that can be strictly nailed down. Just because a place sells for some price does not mean that is market value. As you are well aware, an irrational buyer can always pay more than market value, or an irrational seller can accept less.

 

Your methodology is off a little.  You can't include anything prior to July 1st as that data is included in assessment data.  Also pending date versus sale date should be used.  You fail to talk about distribution greater than or less than assessed values, which if you haven't been careful will give you a false average, which I suspect explains the low average error number you ended up with.  I ran the first couple of weeks in the core 800-1.2 and got a distribution from -11% to +13% over 20 sales with an average error of 4.5% in absolute terms, meaning could be plus could be minus.  Not terribly accurate nor particularly useful other than in the most general of ways.

[MarkoJ]

Leo and David....I literally don't even comprehend what you are arguing. Who gives a rats ass....people buy houses cause their dog has access to the back yard off the deck not some assessment/purchase price algorithm/error numbers. 

 

When reviewing new listings/pending sales/price changes I never ever look at the assessment. Assessment higher than asking price, who cares. Assessment same as asking price, who cares. Assessment lower than asking price, who cares. BC Assessments hasn't been inside most house in decades.

 

Market in general selling higher or lower than assessment....who cares, I've probably already identified the trend via HPI, median, average, or simply looking at what is selling in terms of product.

[tjv]

BC Assessments hasn't been inside most house in decades.

Has BC Assessment come to your house since you completed construction to view the inside ever?

 

They came by mine during construction, introduced themselves and took a pic from the street.  Never been back

[Bingo]

Leo and David....I literally don't even comprehend what you are arguing. Who gives a rats ass....people buy houses cause their dog has access to the back yard off the deck not some assessment/purchase price algorithm/error numbers. 

 

We don't care either as we are not needing to buy or sell. The big earthquake will make the adjustment for the folks concerned with assessments. 

We don't have a dog, and our place is on rock so maybe we are good to go.

[MarkoJ]

Has BC Assessment come to your house since you completed construction to view the inside ever?

 

They came by mine during construction, introduced themselves and took a pic from the street.  Never been back

 

My house they came when I poured the foundation walls. That is still the picture they have on file in their system.

 

At least they got my square footage correct. I've seen brand new homes where BC Assessments can't read the plans and they punch it in at 2,600 sq/ft and it is 4,100 sq/ft.

[lanforod]

^ That's a nice selling feature, as it means your property taxes would be lower 

[DavidL]

Leo and David....I literally don't even comprehend what you are arguing. Who gives a rats ass....people buy houses cause their dog has access to the back yard off the deck not some assessment/purchase price algorithm/error numbers. 

 

When reviewing new listings/pending sales/price changes I never ever look at the assessment. Assessment higher than asking price, who cares. Assessment same as asking price, who cares. Assessment lower than asking price, who cares. BC Assessments hasn't been inside most house in decades.

 

Market in general selling higher or lower than assessment....who cares, I've probably already identified the trend via HPI, median, average, or simply looking at what is selling in terms of product.

 

Ya, I don't use them either because they're useless-I'm arguing your point for you, just using, you know, facts...and people buy houses because they smell like their grandmothers house when they were young and happy and are trying to recapture that, not because their stupid dog can get to the backyard from their stupid deck.

[lanforod]

You're all nuts. People buy houses because they walk in and see a nice fancy kitchen with granite counter tops.

[Nparker]

...People buy houses because they walk in and see a nice fancy kitchen with granite counter tops.

But only if there are 2 sinks in the master bath and a "man cave".

[Mike K.]

Forget the kitchen, it's all about the lawn!

[Matt R.]

People buy houses because they are a four minute walk from work and they can import two foreign workers who don’t need cars! There are lots of reasons...

Matt.

[LeoVictoria]

Leo and David....I literally don't even comprehend what you are arguing. Who gives a rats ass....people buy houses cause their dog has access to the back yard off the deck not some assessment/purchase price algorithm/error numbers.

When reviewing new listings/pending sales/price changes I never ever look at the assessment. Assessment higher than asking price, who cares. Assessment same as asking price, who cares. Assessment lower than asking price, who cares. BC Assessments hasn't been inside most house in decades.

Market in general selling higher or lower than assessment....who cares, I've probably already identified the trend via HPI, median, average, or simply looking at what is selling in terms of product.

Hey grumpy pants.
Not really sure what the argument is either. Assessments are a poor man’s appraisal, and that means they aren’t a great reflection of individual house value. No argument there. They do capture the value of a large enough group of properties pretty well though. And that attribute makes it useful for price trends because it is less affected by sales mix like average/median, and it is not just hyper focused on the benchmark home like HPI
Fact is, lots of people look at that value whether you like it or not. A form of price anchoring.

It’s also one of the only concrete numbers most people that don’t give a crap about the housing market have for the change in value of their house. Every year they get a number for their house and that is more real than a million forecasts and news articles

Edited by LeoVictoria, 27 September 2018 - 01:07 PM.

[Citified.ca]

The Bank of Canada has increased its key lending rate to 1.75% with plans to raise the rate further in 2019. Although existing rental housing is not immediately affected by higher mortgage rates affected by the key lending rates, higher borrowing costs will impact the supply of new rental housing and will increase rental prices throughout the region.

 

Bank of Canada raises lending rate to 1.75%; Victoria renters won't escape impact of rising mortgage rates

https://victoria.cit...mortgage-rates/

[tjv]

^no shock there, everyone expected it.  We are still 0.5% behind the US fed rate and the wide expectation is a full 1% rise in rates in the coming year.  Hold on to your hats boys and girls

[spanky123]

^no shock there, everyone expected it.  We are still 0.5% behind the US fed rate and the wide expectation is a full 1% rise in rates in the coming year.  Hold on to your hats boys and girls

 

And the markets have moved into correction territory today (down 10%) which will start to dry up investment and jobs if this continues.