Richard Bergeron

Starting in early January the City of Calgary mailed out the 2008 Property Tax Assessments. In almost all communities of the city the average value of properties as estimated on July 1, 2007 went up over the July 1, 2006 value. It seems this year, more than in previous years, home and condo owners are confused about the assessed value of their properties. Here are some explanations for that confusion.

The 2008 property taxes in Calgary are based on values from 6 months ago. Since the end of June, 2007 property values in Calgary have experienced some adjustment. The average MLS condo sale price for the month of June, 2007 was the third highest on record for the Calgary Real Estate Board. Since then average values have decreased 6 %. Remember, your tax assessment is based on values from 6 months ago, not today’s value. In the previous 2 tax years as values went up steadily, the taxpayer reaped the benefits of the rising market, by paying taxes on the previous year’s lower value. 2008 is the flip side of that rising market.

It is important to remember that the tax assessment system is more art than science. Errors will occur and the city has an appeal process in place to deal with that. Consider that condos in the same building of the same size and features are assessment thousands of dollars difference in value. Why? Several factors can come into play. A view in one is of course worth more than a suite without a desirable view, an unrenovated condo has less value than one renovated, a premium will obviously be assessed to a penthouse suite over a unit several floors beneath it. Errors in the system do occur. A beltline condo I had listed at the beginning of this year for $499,900 was assessed at $851,000! No amount of market correction can explain that. Needless to say the owners are appealing that assessment.

Another source of confusion for condo owners this year has been the assessed value for their titled parking stalls. Five years ago inner city stalls were almost all assessed $5000. Two years ago many jumped in value to $10,000. Many of my clients this year are calling to voice their shock over their stalls assessment of $30,000. Keep in mind the city uses fair market value to determine property values. Yes, a parking stall in downtown Calgary is easily worth $30,000. New condo developments in the inner city sell extra stalls for this amount and more. If this is what they sell for on the open market it makes sense the city is going to collect tax on it.

No matter what your property is assessed it is important to keep in mind where your tax dollars go. Transit, roads, garbage pick up, utility maintenance, libraries, community and recreation centres, parks, schools, emergency services, green spaces and so much more that our city offers are paid for by our tax dollars. All in all, Calgary is a pretty great place to live. If, however, you feel you are paying more than your fair share your notice of assessment has information on how you can appeal the value of your condo.

Nearing the end of 2007, it has been a healthy and robust year for condominium sales in the city on the MLS system. Nearly 8000 condos have been sold on the MLS this year. Add to this number the thousands of condominiums sold by developers privately, and Calgarians continue to embrace condo ownership. This decision is not always motivated by a more affordable price point. Calgary is seeing more and more million dollar condos. At the end of November, 29 condos over $1,000,000 had sold on the MLS this year.

Selection for condo buyers has greatly increased in the past 12 months. Total inventory on the MLS is up over 35% from last year at this time. This means that sellers are finding themselves having to wait a bit longer to sell their condos. The average number of days to sell a condo in November was 44, compared to 36 days in November 2006. Gone are the days of buyers missing out on listings because they sold in days or hours, like they did in the spring of 2006!

Overall, prices for the condominium market have remained strong. Yes, the average price has dropped since the high of $332,237 in May of this year. Year over year, though, the numbers are moving up. The average price for a condo in November 2007 was $312,710, up over the November 2006 average of $282,781.

A trend to watch that may have a large impact on the condominium market is the number of vacant properties for sale. Currently over 40% of all condominiums for sale on the MLS are either vacant or newly constructed (never occupied) suites. Typically you would see about 30% of suites vacant. In the past 2 years many buyers purchased suites in buildings that were under construction with the intention of selling them (flipping them) as soon as they take possession. Many of these suites are now nearing completion and a large percentage of them may find their way onto the MLS system, further increasing inventory.

Since December 2006, the average price of condominiums in Calgary has increased 11%. At the start of 2007 the Calgary Real Estate Board predicted condo pricing to increase by 9%. All in all the year has been positive for the condominium market. What will 2008 bring? Sorry, my crystal ball is in the shop!