Property taxes Vancouver

Vancouver Property Taxes Lag Massive Home Price Appreciation

Steve Saretsky -

Vancouver Property Taxes Plummet As a Percentage of Home Prices

With Vancouver Detached home prices growing 34% over the past two years (according to the MLS Benchmark) homeowners have benefited greatly from a windfall of equity, on paper anyways.

This has resulted in homeowners using their homes as ATM’s, drawing down equity to finance their Vancouver lifestyle (Homeowner refinancing up 27%). This has helped cushion the blow of paltry wage growth.

However, with a widening wealth gap, increased Government spending and political pressures, one has to think Governments will target wealthy homeowners next. Especially considering property taxes have failed to keep pace with home values.

Annual Property Taxes Fail to Keep Pace With Home Prices

As you’ll see in the charts below, the median tax rate (annual tax paid divided by sale price) for detached homes has failed to keep pace with home prices.

While property taxes have increased on a nominal basis, they’ve actually been falling as a percentage of home value.

Property taxes Vancouver West
Vancouver West Annual Property Taxes

Annual property taxes for Vancouver West Detached homes are just under $9000/ year, or around 0.25% of the homes value (based on median sales price).

On the Eastside, property taxes as a percentage of median sales price is hovering just above 0.3%. Annual taxes paid has been increasing on a nominal basis every year, but again nowhere near recent home price appreciation.

Vancouver East Property Taxes
Vancouver East Detached Median Tax Rate

Property Tax Deferrals On the Rise

Despite substantial equity gains, homeowners are deferring payment of property taxes at a record pace. Property tax deferrals have increased five fold over the past ten years. Suggesting a growing trend of homeowners are facing cashflow problems (likely an aging boomer generation). This creates a unique situation, will some homeowners be forced to sell if taxes continue to rise?

BC Property tax deferrals
Property tax deferrals. Source: Metro News

Political Pressure Rising

Many homeowners experienced a 30-40% increase in property tax assessment values last year, creating a growing increase of tax deferrals and financial stress on some households. Yet despite the tax increase, data suggests taxes have not kept pace with rising home values.

Meanwhile, Governments are facing rising political pressure to tax the rich (See protestors demand mansion tax) and curb home prices. This makes Real Estate a vulnerable target for the next tax grab, regardless of the direction of home values.

Join the Monday Newsletter

Every Monday morning you'll receive a short and entertaining round-up of news on the Vancouver & Canadian Real Estate markets.

"*" indicates required fields

The Canadian Economy

Steve Saretsky -

Happy Monday Morning! We got a string of new data this past week confirming inflation in consumer goods, and housing are proving to be more than transitory. Canada’s consumer price index continued to drift higher with prices hitting an 18 year high, up 4.7% from last October. The recent floods in BC...

Steve Saretsky -

The calls for impending interest rate hikes continues. CIBC’s chief economist, Benjamin Tal, was out recently suggesting the Bank of Canada could hike its benchmark interest rate at least six times beginning in early 2022. “I think there is a risk of getting into the market at today’s rates,” noted Tal....

Steve Saretsky -

The BC Government announced it is looking at several cooling measures for the housing market in 2022. They have highlighted two measures. The first is an end to the blind bidding process, and the other is a mandatory “cooling off period” which will allow any buyer a 7 day recession...

Steve Saretsky -

The Bank of Canada continues to slowly drain liquidity after flooding the system with a firehose of cash during the pandemic. Bank of Canada governor Tiff Macklem announced the end of Canada’s QE program (also known as money printing). Furthermore, in Macklems words, “We expect to begin increasing our policy...

Steve Saretsky -

Consumer price inflation ripped higher in September, surging 4.4% year-over-year, the fastest pace of price increases in 18 years. Let’s discuss this further. We have an inflation problem and the Bank of Canada remains of the view that inflation will be transitory. Although they really can’t say otherwise, for if...

Get the Saretsky Report to your email every month

The Saretsky Report. December 2022