When REALTORS® do a comparable market analysis, or CMA, on a property, they apply their expertise to a rigorous review of sales and listings of similar properties to determine what this property should sell for on the MLS®. If a property goes on the market this month, the CMA provides a sale price based on current market conditions, including other competing listings, prospective buyers for that type of property and the real estate market in general (e.g. consumer confidence, interest rate environment, etc.)
Accepting the final sale is an arm’s-length transaction, meaning it occurred on the open market between a willing buyer and a willing seller. The sale then potentially provides a good reference for others to ascertain what their property may be worth when sold on MLS®.
Over the last year, the city’s property assessment department used 200,000 properties in Winnipeg to determine on a given date what each property would sell for on the open market. The new assessment roll for June 2010 property taxes is based on the market value of properties in April 2008.
And as a result of new provincial legislation, reassessments are now done every two years, making reassessments more up-to-date than was the case in the past. The prior reference period for the last reassessment in 2006 was 2003. You can appreciate what a difference five years makes in value, especially since MLS® average prices in Winnipeg rose annually by a low double-digit rate.
It is impossible and cost prohibitive to do site specific values for the 200,000 properties to come up with a current assessment. Instead, the department uses what is termed a mass appraisal system, using sophisticated models and multiple regression analysis with inclusion of a number of key property attributes.
“Mass appraisal does exactly what the individual REALTOR® does, except on a mass basis,” said city assessor Nelson Karpa at a meeting with WinnipegREALTORS® on the 2010 reassessment results. “We use a direct sales comparison approach seeking out sales of similar properties in the same neighbourhoods.”
One of the major highlights of the 2010 reassessment is how much the assessed values of residential properties have increased over the last five years. The city-wide average value for the 178,000 residential properties is 78 per cent, but inner-city properties increase substantially more to 117 per cent. The inner city had the highest number of sales which helps assessors come up with better property values. The other nine market regions were fairly close to the city-wide average increase. St. Boniface and new St. Vital had the lowest increase at close to 70 per cent.
The fact inner-city neighbourhoods in the West End and North End enjoyed increased sales activity and prices is a good news story for Winnipeg, as it is a clear indication of some positive neighbourhood renewal efforts.
Significant government and non-profit housing group resources have been devoted to turning around some of these neighbourhoods. Instead of being a net drain on the city’s assessment base, as they were in the 1990s when house values fell, these neighbourhoods are witnessing a resurgence. Renters seeking affordable homeownership options are expressing renewed interest in the region.
At over $250,000, the highest time-adjusted-sales price market regions were Fort Garry, new St. Vital/new St. Boniface and Charleswood. Not surprisingly, the inner city was the lowest, but it did record slightly over $100,000.
The 15,000 residential condominium properties were almost up by the same percentage as residential properties. Non-apartment-style condos were up 77.8 per cent, while apartment-style units rose 80.8 per cent.
The department considers the top three “drivers of value” being location, size and age. Of course, they also consider other key property attributes.
In arriving at final values for the 200,000 properties, Nelson Karpa indicated the department was required to undertake quality assurance testing and meet International Association of Assessing Officers standards. He proudly said his assessment and taxation department is ISO 9001:2000 certified, which is authentication of the department’s commitment to quality and continuous improvement.
Other items worth noting were the department’s extensive communications effort through its winnipegassessment.com website; by mailing of individual preview letters with the identification of a private-user ID to obtain more information about individual property assessment; holding a number of public open houses throughout the city; making a number of presentations to professionals such as REALTORS®; establishing a call centre and the publication of Answer Guide for Property Assessment.
Considerable effort was spent to ensure Winnipeg property owners learned everything they need to know about the 2010 general assessment process as well as what they can do if they have any concerns, including appealing their property’s assessment.
What does it mean if a property assessment goes up in value as occurred for many property owners in the current general assessment? Will my property taxes go up too?
If your residential property has gone up an average amount, the taxing authorities — the city and school boards — are only interested in raising the same revenues required for their purposes under your former assessed value. As a result, the mill rate (percentage required to raise necessary revenue) will be lowered accordingly.
Where it can get tricky is the fact the city does a combined commercial/residential roll average increase. So if the commercial property average increase is lower than residential, it will bring the overall average increase down. If a property owner’s home is in line with the average increase for residential properties, it will end up being higher for the combined commercial/residential average, thus resulting in the property owner paying higher property taxes.
The WinnipegREALTORS® commercial division representatives are meeting next week with the property assessment department to discuss the results of the commercial assessment roll.