Thousands of Saint John properties that escaped assessment increases this year, including dozens that sold for record prices, are slowing growth in the city’s tax base for 2022 compared to other cities.
That’s at odds with predictions from Service New Brunswick officials earlier this year, and Mayor Donna Reardon wants to know why assessments in other communities appear to follow different rules.
“That to me is a question I’d like to get answered,” Reardon said.
“I have to say I don’t understand it.”
Real estate sales in Saint John set records in both volume and price over the past year.
But although Service New Brunswick officials told the city in February that it would “reap some of that reward” with growth in its 2022 tax base, the results announced earlier this month were underwhelming.
City’s tax base ranks 43rd among N.B. municipalities
Based on property assessments completed this year by Service New Brunswick, Saint John’s tax base is expanding by 6.24 per cent for 2022 according to figures released earlier this month by the province
That’s more growth than in recent years, but still well below the provincial average of eight per cent.
Part of the sluggishness is because 5,332 residential, commercial and industrial properties in the city, one in every five, escaped any assessment increase at all from Service New Brunswick.
That helped to drag growth in the city’s tax base down to 43rd place among all New Brunswick municipalities.
Moncton had only 888 properties awarded no assessment increase for 2022 and Fredericton just 680.
Most perplexing for Saint John are dozens of properties given no change in their taxable values, even after being sold to buyers for double their assessment and more.
On Saint John’s upscale Anchorage Avenue, five waterview lots sold earlier this year at prices between $151,000 and $230,000.
The sales were an average of 144 per cent above the properties’ 2021 assessed values, but the high prices triggered no changes in their assessments or in assessments of other lots in the neighbourhood.
As a result, the sales added nothing to Saint John’s critical tax base growth for 2022. One of the Anchorage lots purchased in May for $169,000 has since been relisted by its new owner at $209,900. However, for taxation purposes, Service New Brunswick continues to assess it at $75,200.
That appears to contradict Service New Brunswick’s claims that its annual assessments approximate what a property will reasonably sell for if it were put on the market.
According to the agency, a collection of actual sale prices in a neighbourhood are considered the most reliable guide to what assessments should be in an area.
“Your property’s real property assessment value reflects its market value,” the agency explains on its website.
“Our assessors aren’t actually determining market value,” it notes. “They are simply reflecting the values that have been established by buyers and sellers in local real estate markets across the province.”
That is what happened in Moncton in a development going up around the Mountain Woods golf course.
This year, eight lots in the development sold to buyers for an average price of just over $102,000 each — 98 per cent above their assessed values.
Based on those sales, Service New Brunswick raised assessments on all eight lots and six others nearby by an identical 98 per cent. The change accurately reflected sale prices in the development and the rising assessments added $621,400 to Moncton’s 2022 tax base.
It’s a sharp contrast to what Service New Brunswick did on Anchorage Avenue and in a second Saint John neighbourhood along the Bay of Fundy.
On a stretch of Saint John’s Sea Street, perched above Bayshore Beach with panoramic ocean views, 18 building lots sold to buyers this year for a combined $892,750.
It was, on average, more than double their assessed value.
However, 13 of the lots have been awarded zero per cent assessment increases for 2022, as have seven existing homes that sit among them on the same street.
Service N.B. ‘can’t discuss the details’
Oceanview properties in Saint John have been among the highest in demand over the past year, selling for $100,000 or more above their assessed values in several cases.
Service New Brunswick says it cannot reveal why it concluded Oceanside properties on Sea Street warranted no increases in their values, even those that sold for higher than their assessed price.
“We cannot discuss the details of individual properties,” Jennifer Vienneau, Service New Brunswick’s director of communications, said in an email.
“It is not uncommon for external factors to affect the market value. On an annual basis, property assessors analyze these factors to make adjustments to assessment values that are in line with market activities.”
Reardon thinks Service New Brunswick is not following the same assessment rules in Saint John as it does in Moncton, and that difference is restricting growth in her city’s tax base.
“If I say a lot’s worth $150,000 to me and there’s been a few of them that have sold for that, that’s the price. That’s what they’re worth,” she said.
“We’re trying to work with Service New Brunswick. I think it needs to be more transparent, more clear to people. We need to understand how they come up with the calculations.”
Red-hot Canadian property market to lose some steam in 2022: Reuters poll
Canada‘s double-digit house price inflation will lose steam next year, but affordability is still almost certain to worsen in one of the world’s hottest property markets, according to a Reuters poll of analysts.
A rush to purchase homes ahead of expected increases in Canadian interest rates https://www.reuters.com/world/americas/bank-canada-q3-2022-rate-hike-expected-q2-rise-possible-2021-12-03 next year is boosting the housing market in the final quarter, with prices skyrocketing 18.2% https://www.reuters.com/article/canada-economy-housing-idCAKBN2I01EP in October compared to the year-earlier period.
Extra froth in the market, driven by investors fueling perceptions that prices will keep rising, has prompted the Bank of Canada https://www.reuters.com/markets/us/canadas-housing-market-higher-risk-correction-says-bank-canada-2021-11-23 to recently warn of an increased risk of a correction.
“Affordability is unlikely to improve next year as prices should march higher, even as interest rates creep upwards as well,” said Rishi Sondhi, economist at TD Economics, who expects house price inflation to slow considerably next year.
“We think rate hikes will weigh on, but not upend, demand, as the macro backdrop should remain supportive for sales.”
Average house prices in Canada are expected to rise 18.6% this year, up from a 16.0% rise predicted in an August poll.
But those increases were forecast to slow significantly, to 5.0% in 2022 and 2.0% in 2023, according to the poll of 15 market analysts which was conducted from Nov. 17 to Dec. 6 and released on Tuesday. That compared to rises of 3.2% and 2.6%, respectively, in the August poll.
Only two respondents expected prices to fall in 2023, and by modest amounts.
Asked what would have the biggest impact on house prices next year, nine of 14 respondents said higher interest rates or tighter monetary policy. The remaining five cited supply constraints.
A follow-up question on how many basis points of interest rate hikes would significantly slow housing market activity had a median forecast of 100, with predictions in a range of 75 to 175 basis points.
Canada‘s central bank is expected to start raising interest rates by the end of the third quarter https://www.reuters.com/world/americas/bank-canada-q3-2022-rate-hike-expected-q2-rise-possible-2021-12-03 next year.
“One or two rate increases is unlikely to have a meaningful impact, but if we see four or more rate increases in 2022, this should take some demand out of the market, especially from interest rate-sensitive investors,” said John Pasalis, president of brokerage and research firm Realosophy Realty.
For many first-time home buyers, prices have climbed beyond their reach and a supply shortage of housing units has only aggravated their woes.
“Investors, house ‘flippers,’ and speculators, who according to the Bank of Canada account for over 20% of home purchases, have aggravated the severe demand-supply imbalance, boosted prices even higher and made housing more vulnerable to a correction,” said Tony Stillo, director of economics for Canada at Oxford Economics.
All 15 analysts who answered a question about affordability over the next two to three years said it would worsen.
“Out-of-reach housing prices will invariably lead more Canadians to rentals, especially if they have to live close to where they work. However, people who can work remotely will continue to migrate out of more expensive urban centres and ‘drive until they qualify,'” Stillo said.
(For other stories from the Reuters quarterly housing market polls:)
(Reporting by Swathi Nair; polling by Indradip Ghosh and Sarupya Ganguly; Editing by Ross Finley and Paul Simao)
Grand County real estate transactions, Nov. 28-Dec. 4 – Sky-Hi News
Grand County’s real estate transactions Nov. 28-Dec. 4 were worth more than $21.9 million combined.
• Valquero Subdivision Lot 2, Access Easement/Drainage Easement – Byersview Inc to Triton DG Granby LLC, DGGrand LLC, As Investments LLC, $2,050,000
• 448 Condominiums Unit 303 and Garage Unit 1 – Virga Corporation to Timothy Smith, $634,496
• Wells Minor Subdivision Lot MH-1A – Colton and Jeffrey Powley to Colorado Mountain Resorts Investors LLC, $381,741
• Fairways at Pole Creek PH 1 & Open Space Lot 4 23 – Linda and Donivan Ridgway Jr to Melissa and Joe Penn Jr, $2,480,000
• Eggert Subdivision Lot 5, Block 1 – Marjorie and Robert Noakes to Matthew Herron and Heidi Keyes, $412,250
• Fraser Crossing-Founders Pointe Condominium Unit 4470 – Copernicus LLC to Winter Park Drive 4470 LLC, $480,000
• 448 Condominiums Unit 101 and Garage Unit 5 – Virga Corporation to Jeffrey Vose, $725,944
• Roam Filing 1, Lot 18, Block 5 – Ski Idlewild Property LLC to Hunt Vac Services LLC, $950,000
• Zephyr Mountain Lodge Condo Bldg 1 & 2, Unit 2605 – Scott and Kimberly Balfanz to Scott and Anne Steputis, $850,000
• Zephyr Mountain Lodge Condo Bldg 1 & 2, Unit 2401 – Erik Amy LLC to Jeffrey McDonald, $579,000
• SEC 6 TWP 1N R 76W Partial Legal – See Document – Ellen Pacheco to Samuel and Monika Conger, $600,000
• Ptarmigan Subdivision Fraser Lot 102, Block MH – Fiona Russell to Derek Jotzat, $725,000
• Inn at SilverCreek PH 1, Condo Unit 322 – Glenda Sinardi and Parker Clonts to Charles and Lea Maxwell, $225,000
• Frontier Investment Company Addition to Kremmling Block 6, Lots 1,2,3 – Lodema Reinier, Lodema Cullum to Kelsy and Devin Ailport, $479,000
• Heinis Addition to Kremmling Block 1, Lots 5,7 – Benjamin and Kellie Steinle to Kristina Costa, $440,000
• Base Camp 9200 Second Replat Unit B2 – Sandhills Capital LLC to David and Marla Schmidt, $395,000
• Granby West Business Park Block 1, Lots 1,2 – Granby Industrial LTD Liability Co. to Elk Mountain Adventure Properties LLC, $300,000
• Mildred June Weaner Outright Exemption Lot J – Monarch Cabin LLC to Jerry Johnson, $430,000
• Rangeview Subdivision #2, Lot 33 – Randall Claeys and Stephanie Conners to Colin and Krystal Steward, $90,000
• Lake Forest 1st Addn Subdivision Lots 42,43,48,49; Laurent OE Lots A,B – Serge Laurent to Margaret J Blakley Revocable Trust, $800,000
• Meadow Ridge Lodges Court 7, Unit 9 – Eric Stanczak Jr to Rachael Watton, $580,000
• Muddy Creek Minor Subdivision TRT D – Muddy Creek Partners LLC to Areceli and Hugo Gonzalez, $325,000
• Bussey Hills Subdivision Block 7, Lots 7,14 – Michael Blasi and Arthur Aguilar to Heather and Michael Rinaldi Jr, $45,000
• Grand Lake Block 10, Lots 1,2,3 – GLL Real Estate LTD to McCarthy 401K Plan Trust, $1,150,000
• Rendezvous Center Condominiums Lot 3 – Rendezvous VC LLC, Koelbel Company to Brandon Kunz and Keith Jensen, $1,719,000
• Fraser Crossing-Founders Pointe Condominium Unit 3523 – FC 3523 LLC to Geoffrey and Rachel Nuwash, $485,000
• Crestview Place Condominiums Unit 604H – Debra and Robert Reehoorn to Beryl Foster and Robert Henry, $731,400
• East Mountain Filing 11, Lot 25 – Rendezvous Colorado LLC to Duncan, Peter and Suzanne Griffiths, Rochelle Rabeler, $1,465,904
• East Mountain Filing 10, Lot 138 – Rendezvous Homes LLC to Bawcom Living Trust, $1,424,366
Treasury wants more oversight of all-cash real estate deals – North Bay Business Journal
WASHINGTON (AP) — The Biden administration is looking to expand reporting requirements on all-cash real estate deals to help crack down on bad actors’ use of the U.S. market to launder money made through illicit activity.
The Treasury Department was posting notice Monday seeking public comment for a potential regulation that would address what it says is a vulnerability in the real estate market.
Currently, title insurance companies in just 12 metropolitan areas are required to file reports identifying people who make all-cash purchases of residential real estate through shell companies if the transaction exceeds $300,000.
“Increasing transparency in the real estate sector will curb the ability of corrupt officials and criminals to launder the proceeds of their ill-gotten gains through the U.S. real estate market,” said Himamauli Das, acting director of Treasury’s Financial Crimes Enforcement Network.
Das said the move could “strengthen U.S. national security and help protect the integrity of the U.S. financial system.”
The metropolitan areas currently facing reporting requirements are Boston; Chicago; Dallas-Fort Worth; Honolulu; Las Vegas; Los Angeles; Miami; New York City; San Antonio; San Diego; San Francisco; and Seattle.
The U.S. real estate market has long been viewed as a stable way station for corrupt government officials around the globe and other illicit actors looking to launder proceeds from criminal activity.
The use of shell companies by current and former world leaders, and those close to them, to purchase real estate and other assets in the U.S. and elsewhere was recently spotlighted by the International Consortium of Investigative Journalists’ publication of the “Pandora Papers.”
The leaked documents acquired by the consortium showed King Abdullah II of Jordan, former U.K. prime minister Tony Blair and other prominent figures used shell companies to purchase mansions, exclusive beachfront property, yachts and other assets for the past quarter-century.
The tax dodges can be legal but have spawned various proposals to enhance tax transparency and reinforce the fight against tax evasion.
The effort to push for new real estate market regulation comes as the Biden administration on Monday issued its “U.S. Strategy on Countering Corruption.”
The strategy was published as President Joe Biden prepares to host the first White House Democracy Summit, a virtual gathering of leaders and civil society experts from more than 100 countries that is set to take place Thursday and Friday.
The strategy offers broad brushstrokes for confronting corruption at home and abroad. It includes calls for the U.S. government to shore up regulatory gaps, elevating anti-corruption in U.S. diplomatic efforts and bolstering the protection of civil society and members of the media, including investigative journalists, who expose corruption.
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