2017 was a whirlwind of excitement. Definitely a year much
better than 2016.
What’s Happened?
2015 and 2016 saw property values in the Calgary region drop
on the average. However, each segment dropped more than others. The drop was
mainly due to a significant decrease in demand. In the 2008-2009 drop we saw demand
significantly drop, yet supply remained fairly constant. Thus by basic supply
and demand, values dropped significantly. This time supply dropped at the same
time demand dropped. This again is broken down a bit more (benchmark):
Detached Dwellings: $505,345 or up 0.67%
Apartment Units: $264,000
or down 4%
Attached Dwellings: $332.528
or down 0.16%
Semi-Detached Dwellings: $420,964
or up 4.1%
Row Housing: $299,573
or down 3.1%
All sectors of the apartment units saw decreases in values.
For the most part property values have been reasonably
stable over the past 12 months. The key difference being the downtown condo
market. Currently in the downtown market there are 321 apartment units listed for
sale and 142 sales in the past 90 days. Not including new units. This
represents almost 7 months of inventory. The average days on market is 68 at a
95% LP/SP ratio. In 2 recent appraisals completed in the downtown area, the
Final Estimate of Value was approximately 15-20% lower than the purchase price
from 2013-2014. So keep this in mind, there is a lot of inventory out there
still. I think it may take up to 2 years for the market to stabilize with new
units coming on line. The rental market is also responding. Many of the units,
developers can’t close (due to decreased values) and therefore are renting out,
flooding the rental market. So if you are looking for a rental in the core, you
can get a nice 2 bedroom/2 bath unit in a newer building with an indoor parking
stall for like $1500 per month.
In the coming months I think we will continue to see a
reasonably stable and balanced market. Values will most likely follow
historical trends related to seasons. Slow in the winter months, strong in
spring, steady in summer and fall.
When looking for values, if you have questions feel free to
contact me. Remember listings can help to show you where the top end of the
market is. Assessment values may not suggest value as they are about 18 months
old right now.
Assessment
In the coming weeks property owners in Calgary and
surrounding areas will be receiving their 2018 property assessments. I’m
willing to guess many will be surprised. This is because values may have
jumped. Remember values are effective as of July 1, of the previous year. In
many areas we saw a robust summer. Tax rates will probably not be set yet and therefore
your taxes may or may not go up. Rule of thumb I tell people is if you think
the value is over $40,000 to $50,000 high it may be worth your while to appeal.
The cost to appeal is about $100 to file plus other costs. A full appraisal is
your best line of offense. Given the cost of the filing, appraisal and time off
work to go to the appeal board you may be looking at about $500 in cost or
more. If you only decrease the tax by $600 per year is it worth it? Ask one of
us appraisers and we can help out.
Mortgage Rules
I’m not a mortgage professional but talking to a number of
professionals the new rules may squeeze out some. Overall it looks like there
probably will be a lull in January and February while the market adjusts.
Values for those low end properties may drop as the demand decreases. Over time
values will balance out.
Values
Remember in real estate we’ve been taught 3 things provide value.
Location, location and location. Sure that is only partially true. There are so
many other items which can impact value. Including size, condition and finishing.
Condition and finishing are very subjective but as appraisers we have to have
proof to quantify our adjustments. Realtors have the luxury of going with their
gut, but appraisers must prove the adjustment. The key to all appraisals is
called “The Reasonable Appraiser Test”. That is “would a ‘reasonable’ appraiser
make or not make that adjustment?” Not only do we have to prove why we used
those sales but we may be asked to explain why we did not use certain sales. So
if we come in at a value, we must use the most comparable sales, requiring the
least amount of adjustments. Many lenders also have requirements we must follow
for the appraisal to be accepted. Any questions or needing help on if a
property may appraise out, feel free to contact me.
New Appraisal Rules
Starting in January you may see that the forms have changed.
The Appraisal Institute of Canada has
mandated a new form which will be CUSPAP compliant. These forms are mandatory.
Main changes include:
·
Type of mortgage (if I is a mortgage appraisal)
You must check, 1st, 2nd: other and if it is
conventional. We can no longer state it is just for financing or mortgage
financing. This change is made to reduce risk.
·
More comments regarding the Highest and Best Use
of the site
·
New designation, AIC Candidate Member, CRA P.App
or AACI P. App. (The Professional Appraiser designation for CRA’s will start in
January 1, 2018) including AIC membership #.
·
New market rent addendum and progress inspection
report
So keep these in mind as the appraiser may/should ask the
type of financing. Infact just include it in any order.
Me
Ok I always like to keep info on myself on the down low. I
recently was granted my CRA designation. I want to thank all of you who helped
me learn and obtain the designation. What does that mean? Well I no longer need
someone to co-sign my reports, and a raise. And sometimes improved turnaround
times. As of now I still have all Scotia files co-signed by our Scotia approved
appraisers. I am thinking about getting on their list.
In the past the designated appraisers did not want to do stand
alone rental reports or Schedule A reports. I have created a file which is
CUSPAP compliant and helps to show the estimated value. So if you have those
feel free to contact me.
I am doing all the assignments through NAS for our company.
That means all Scotia ordered through NAS will come to me. I haven’t changed our
fee on there, but will in the new year, to reflect new costs, changes and since
the price on there was set in 2007. The increase will be about $25-35. I also
do all the RPS files but most of the work I do there on a quote basis. However
if you do have a unique property and must order through NAS/RPS I have found in
past experience they will send to me if we contact them first. Some lenders may
have an acception, while others may not.
We are also branching out into other consulting assignments.
Such as measuring dwellings, floor plans and full assistance with creating a
marketing package for sellers and buyers.
Throughout this past year I have also expanded my research.
Recently completed an assignment on a former grow op dwelling. The house was
used as an illegal grow op in 2005-2006. The client bought the remediated house
in 2006. The assignment was decide if the stigma of a grow op still exists and
if so how much. Through current market evidence, we know new grow op houses
usually have a stigma adjustment of 15-20%. My hypothesis was that there still
was a stigma but how much? So I took time and did a detailed analysis,
searching for similar aged remediated grow ops from the mid 2000s. After a few
days of research and back up I found that the property still had a stigma of
approximately 5%. I’ve been asked by the AIC to do a draft paper for a potential
publishing.
Given that appraisers can help you and your clients decide
and figure out values and adjustments for even the most complicated situation.
Feel free to contact me for more information.
Again thank you very much for everything you have done over
the years. I want to take this time to wish you a Happy Holidays, Merry
Christmas, Happy Chanukah and what you celebrate. This will be my first time in
12 years I will be single for Christmas and I’m looking forward to just relaxing,
me and my dog. And have a Happy New
Year.
  |
Jared Nolan Moore, CRA
|
|
Bus: (403) 614-3200
|
|
Comments
Post a Comment