(Submitted photo/Mel Rothenburger).

By Mel Rothenburger

ARMCHAIR MAYOR

ROTHENBURGER: Ballooning assessments pit homeowners against renters

Jan 8, 2022 | 6:43 AM

A LOT OF NEW MILLIONAIRES are walking around Kamloops these days. They don’t look different than anyone else. Their clothes aren’t any fancier; they likely don’t wear gold necklaces and designer shoes.

They’re just ordinary folks whose property assessments are in the mail (maybe you got yours yesterday). When they open them, they might find that the assessed value of their homes has suddenly shot over the $1 million mark, thanks to B.C. Assessment Authority, which has boosted property values for single-family homes by 27 per cent on average in the city. In some places, it’s as much as 50 per cent.

What was a nice, average-priced home a year ago is suddenly worth a million bucks. That’s just the market, according to B.C. Assessment. In fact, those assessments tend to lag behind the market by a few percentage points, so homes usually sell above assessed value. Let’s pause here to remind ourselves that higher assessments don’t necessarily mean higher taxes. If tax rates were static, yes, taxes would follow assessments. But local governments set their budgets according to what they want to spend, then set tax rates on assessed value to bring in the amount of money they need.

(Property taxes almost inevitably go up from year to year anyway as local governments add inflationary costs and various projects to what they spent the previous year.)

It’s true that those of us whose property is assessed higher than the average will pay more; those whose property is assessed at less than the average will pay less.

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That would seem to suggest that higher assessments are a good thing for the property owner, as it means their home will bring more money if and when they choose to sell. It is, however, bad news for anyone wanting to buy, especially as wage increases lag behind inflation.

This generates a host of conflicting views on affordability. Those struggling to buy even a modest home are attracted to the notion of taking from those who already enjoy ownership and redistributing it in various ways to those without.

Many, for example, would favour doing away with the homeowner grant. The grant has been around since 1957, thanks to W.A.C. Bennett, who was premier at the time.

So, once again this year, homeowners will be able to subtract the amount of the grant — under recently changed rules, we now must apply for it separately and annually instead of the old one-step process — from the taxes they pay to their local government, whether regional or municipal.

That saves them several hundred dollars. How many hundreds depends on where you live and whether you qualify for a disability or age exemption. Not all homes are eligible, though. Four years ago, the Province raised the maximum home value to $1.6 million in order to be eligible for the grant.

That was done in another year of big assessment increases and was designed to maintain the percentage of homeowners who quality to around 92 per cent. This year, the threshold will go up again, to $1.975 million, for the same reason.

Another way to get at perceived inequities in the housing market is to slap a surtax on homes once they reach a certain value. A 67-page report funded by Canada Mortgage and Housing and published this week, recommends such a surtax, claiming it could help reduce housing inequality and cool the housing market. Homes valued at more than a million dollars would be taxed an extra one per cent.

The report takes on a tone that suggests homeowners are couch potatoes watching their net worth climb as housing costs go up. Let’s remember they’ve already paid dearly for the privilege of home ownership. A million-dollar loan could well cost close to double that by the time it’s paid off in 30 years. Many homeowners are still paying mortgages, wondering when rates will go up. There’s no shortage of housing in Canada. CMHC data from mid-year 2021 showed 18 homes per new person were being built. Yet we know that many, many people can’t afford home ownership, or don’t even have roofs over their heads.

Something has gone wrong with supply and demand, and the conclusion is obvious: we’re building homes for the wrong people. We’re over-supplied in some parts of the market and under-supplied in others. Redistributing the market is the answer, not redistributing wealth. As the Canadian Taxpayers Federation points out, “Higher taxes won’t make homes less expensive, higher taxes make everything more expensive.”

It all boils down to an unfortunate standoff between renters — many of whom would like to be owners — and those who have taken out mortgages. The affordability gap is widening.

Those who pay rent need longer-term relief, not just temporary programs like those in play during COVID. Still, most renters no doubt cling to the dream of ownership, and when they see house prices go up by hundreds of thousands of dollars in a single year, that dream slips ever further away.

Annual property assessments are like a billboard announcing the widening divide between the two.

Mel Rothenburger is a former mayor of Kamloops and a retired newspaper editor. He is a regular contributor to CFJC, publishes the ArmchairMayor.ca opinion website, and is a director on the Thompson-Nicola Regional District board. He can be reached at mrothenburger@armchairmayor.ca.

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Editor’s Note: This opinion piece reflects the views of its author, and does not necessarily represent the views of CFJC Today or Pattison Media.