Bowen Island's property values have experienced some of the largest declines in the Vancouver Sea to Sky Region, according to the B.C. Assessment Authority that released its 2013 numbers last week. Also in the bottom category are the neighbouring communities of the Sunshine Coast, Pemberton and Whistler.
Examples of recently-issued 2013 notices show an assessment for a Bowen Island non-waterfront, single family dwelling at $454,000, compared to $530,000 in 2012. That is a decrease of about 15 per cent. For an example waterfront property, the drop is even steeper: about 25 per cent - the single-family dwelling on the waterfront was assessed at $1,307,000 for 2013 and $1,708,000 for 2012.
Bowen Islander Hans Merkelbach has been involved in financial services all his life and worked with Dundee Wealth Management, a securities company with $50 billion under management. He was not surprised by those numbers.
"In 2011, the assessment of our property came to $1,290,000. And someone was prepared to pay $1,700,000 in 2012," Merkelbach says, adding that it is a beautiful property with sweeping views. "In 2012, our assessment moved up to $1,332,000. My contention was that the market had already dropped at that point." Merkelbach appealed the assessment and got a reduction of about $100,000. In 2013, his assessment came in at $916,000 - 30 per cent lower than the 2011 number.
He believes that this reflects a more accurate assessment of Bowen waterfront property values.
"The 2012 assessments were based on run-away prices, in other words, they were at their highest point ever," Merkelbach said, adding that he believes that the real decline started as early as October/November 2011. "That was a high in [property] prices and from there on, they started going down," he explained. "There were fewer sales in 2012 and the number of houses listed went up."
According to the Real Estate Board of Greater Vancouver's Multiple Listing Service, there were 43 home sales on Bowen Island in 2012 and 47 in 2011.
"A lot of people think that [the value of] real estate will go up forever but it won't," Merkelbach said. "Everyone seems to be hooked on debt and many have no other investment to retire on - it is all in our homes and granite counter tops."
Merkelbach says that the good gains that could be achieved 20 or 30 years ago are gone. "We won't see anything like this in a long time," he said. "But if you don't have to sell, this is not going to affect you that much." Merkelbach explained that assessed value tends to influence the future selling price of a home, but is also reflected in taxation rates.
"Across the board, our assessments are down 16 to 18 per cent average," Merkelbach said, adding that this will have an effect on municipal coffers. "I wonder what the municipal government will decide to do. If they don't increase the mill rate, it would mean they take in less taxes. That in turn, means less services, less fixing the roads. It will also mean that projects like the community centre might have to be parked for a while."
On the flip side, Merkelbach believes that there will be more houses on the market and prices will drop even further. "Personally, I don't see the real estate market recovering for the next seven years," he says.
Assessments are considered a snapshot of the property value as of July 1, 2012. The total assessed value of real estate in B.C. rose 2.3 per cent from a year ago. Owners can check their assessments online at bcassessment.ca (click on e-ValueBC) and compare with others in their neighbourhood to decide if they want to file an appeal by January 31.
