This Kerrisdale home belonging to Elvis Cepus has been reassessed for $1.859-million
“Elvis Cepus says he’s all for seeing his home in Vancouver’s Kerrisdale neighbourhood increase in value, but the one-third jump in his assessed value this year means his “ugly” bungalow has now hit nearly $1.9-million.
Mr. Cepus’s original 1955, 2,200-square-foot bungalow is just one of the West Side homes hit by assessment increases around 40 per cent higher than last year. While the average detached single-family residence, condo or townhouse in the city has gone up by about 16 per cent, the west side of Vancouver as well as the municipality of West Vancouver were hardest hit. Increases in those areas are typically around 25 per cent higher this year – and in certain pockets, such as Kerrisdale, the jump is more than 40 per cent.
Like everyone who’s sitting with a much higher assessment this year, Mr. Cepus is worried about tax increases come July. He realizes he got a deal when he purchased his house for $920,000 when the market had crashed in early 2009. Last year, when it was assessed at $1.385-million, he was shocked but pleased at the value of his modest, un-renovated house. This year’s $1.859-million assessment is a different deal.
“It’s the ugliest house on the street,” said Mr. Cepus, an engineer who lives there with his family. “We’re talking powder-blue bathroom and plywood cabinets in the kitchen.”
The home is valued at $17,000, so the value is in the 56-foot lot. He guesses the increase is due to large, 4,500-square-foot houses being built in his neighbourhood, driving up property values.
“There are massive houses being put up everywhere. I don’t have a leg to stand on, not if that’s what houses are going for, and that’s what comparables are doing,” he said. “But almost $1.9-million? Oh my God, when is it going to stop? The reality is people born and raised in Vancouver won’t be able to live in Vancouver anymore.”
- from ‘Assessments hit Vancouver homeowners hard’, Globe and Mail, 18 Jan 2012
This story is noteworthy for the apparently genuine sense of disbelief in the homeowner regarding market price.
Obviously this guy should be noting his own emotions, and taking them to the bank by selling.
Wise contrarians sell assets when they find themselves singing on in the car in celebration of their value.
Elvis may, however, be caught like a deer in the headlights, and watch frozen as the price reverts.
These lots will sell for a lot less than $900K in the trough.
- vreaa
And here come the news stories. I’ll try to pull out a comment I made last year that these stories will make the news in January when the assessments invoke some sticker shock.
Assessments going up are not necessarily indicative of increased taxes because first it’s based on relative, not absolute, valuations of other properties in the city and second it’s based on a 3-year moving-average. When we hear about 40% increases, other properties have seen only about 5% and some have gone slightly down. So that’s immediately a 10% differential with averaging.
A few hundred dollars increase is not a killer but if prices stay high for another 2 years those are some mighty big tax increases to swallow!
Actually isn’t City of Vancouver the only municipality that taxes as a % of property value? So the more your house price goes up, the more tax you pay period? I’m pretty sure I read that somewhere that while other city assess property tax based on budget and relative home values, Vancouver does iits property pretty much like a % tax on capital.
No, the tax base is relative to other valuations. It’s nothing much different than other municipalities, though there is a 3 year trailing moving average.
Here’s the post I wrote in May 2011:
http://housing-analysis.blogspot.com/2011/05/thorny-issue-of-vancouvers-civic-taxes.html
Thanks for the link, jesse:
“probably a few sad stories of long-time-resident grandmothers who will face significant pain to their bottom lines.”
Prescient.
Now, what else do you foresee?
Gregor needs the money to bail his son out of jail. And build more bike lanes
wow. that’s an asshole comment.
Agreed. The young man in question was actually a foster child they took in for a few years back when the kid was a kid. Good for the Robertson family!
Asshole comment about an asshole? How about him calling me a chink because I didn’t see him when turning on Cambie st. I didn’t hit him. We all make mistakes. But the fucker is racist. I could care less about him.
[Less off-topic expletive ad hominem, please. -ed.]
Says the comedian
Van guy, let me guess: you were driving, and he was walking/cycling?
Re: bike lanes
I have this directly from a person working for the city – The city is losing millions of dollars every year because of the lost revenue from parking meters that have been removed to make place for the bike lanes.
I think Gregor has all the money he needs. You can thank Happy Planet for that one.
“when the market had crashed in early 2009″
Crashed? I guess he means that little 21% correction? Let’s see a 50% correction at least from these levels please, tbh more like 60%.
http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/vancouver-primed-for-housing-correction-bmo/article2050160/
Okay I will be honest, 75% off and I actually think this market would be fairly priced. Sounds nuts maybe, but much more than $500k for that house and some other 2 million dollar dumps posted recently is just a big ripoff. So, lets see a 75% off correction please, I might even call that a “crash”
.
Be careful what you wish for. And what u are asking is worse than the US crash. How are they doing?
If you want to be unemployed, then sure, go to the church and pray for this. 40% will be the most I would hope prices will decline.
“Hope”, “wishing”, “praying” and “asking for” doesn’t come into this.
The market is two to three times overvalued.
The coming price implosion is baked in, regardless of what any of us want.
@Vanguy I would be happy if this eventually happens, and the rebuilding can begin. If it brings pain it is because we built a giant house of cards, a skyscraper. It should come crashing down then the rebuilding can begin based on fair pricing, not a tulip market. The pain is inevitable, and the longer it’s put off, the worse it’ll be for those who are living this pipe dream.
If Elvis has some good sense, we’ll be reading in a few months that he left the building.
Another lucky f*cker who lucked out and will now make more $$$$$ on the house than he will likely make from his regular job over the course of his career. Sell buddy sell. You won the lottery, now go sell to those mainland Chinese who came here with suitcases of corruption, bloody money, and then go turn around and tell them just what a bunch of corrupt, evil, dirtybag they are while you hold their money.
@space889, how do you know that this Elvis Cepus guy is not corrupt, evil, dirtybag and he bought the house 3 years ago with suitcases of corruption, bloody money.
I thought only mainland Chinese are allowed to be corrupt, evil dirtybags and everyone in Canada is all moral and ethicals?? That’s what I keep reading from vancouvercondo blog.
Which vancouvercondo blog?
That’s just pure jealousy. Go make your own corrupt money too then
Now, does a bull see this as evidence that house prices will double across the board on the west side in the next couple years??
Home buyers, what say you?
Why not? Prices are completely detached from any economic reality. Why not 10 billion dollars?
sounds like a decent fellow. hope he manages to navigate the waters safely.
How new is that picture? If recent, it looks like he has already made his decision regarding cashing out.
I wonder if he’ll be as “shocked but pleased” about his property tax bill?
The local municipalities are getting used to this tax revenue as well. Think about what will happen to local service levels after the correction.
Please see jesse’s comment above, property taxes are based on relative valuations.
The local government decides it needs to raise $X, assesses total property value as $Y, and then sets rates so $Y*(tax rate)=$X. If valuations fell 50% in one year and they still wanted to raise $X then they would just double the tax rates.
New assessment at $1.859 million. Then, bingo, new for sale sign up or so it appears from the photo. List price at $1.888 million. Cool $1 million tax free in 3 years. That’s more money than most people will earn in their entire lives working. But remember it’s not a bubble because these prices are justifiable and sustainable because the real estate agencies say so.
More astute real estate dealings in Vancouver’s Shaugnessy neighborhood:
50×120 lot reno’d, listed May 2010 $2.18mm
http://www.winniechung.com/Properties.php/Details/1471
Torn down, rebuilt as new spec: Jan 2012 $4.75mm
http://www.ecorealtyinc.ca/listing?id=259206629
Makes me want to buy it and flip in a year’s time! Good deal!
U should. Buy today. Sell later for 3 mil
The unreno’d version sold in 2009 for $1.6m or so. They did maybe $80K in renos before listing in 2010. What a joke.
If he sells now, he has accumulated a lifetime of savings as an engineer. In three years! How will we collectively replace the cash that the speculating bandits have made off with? This bill must be paid, and it will crush the city and maybe the country. The government must stop allowing people to borrow against these outrageous valuations and save us from ourselves. We face ruin.
The bill is being paid – by those still buying at these ridiculous prices. Backstopped by the banks. Which are backstopped in turn by the CMHC. Which is backstopped in turn by…….. us. So, uh, it is us who will pay the bill. And yes, we face ruin. It is far too late to do anything.
THe time to do something would have been a decade ago, and the restricting of mortgages at a time when people were just starting to really enjoy the home equity boom would have made any sitting government so unpopular as to ensure electoral defeat. Blame the politicians for catering to our worst instincts, but don’t forget to also blame our worst instincts.
Seriously? Just say this was Asian money that bought this property, they aren’t looking to ‘flip it’. They want the land, that doesn’t affect the volatility of the market.
If someone is willing to pay a certain price then that is what it is ‘worth’ to them. You can’t stop people from wanting to live here. You offer complaints but no solutions. Things that happened a decade ago don’t matter at this point,
Even if prices did drop, the demand would still be there and Asian money would buy more than they currently are ‘at a bargain’.
Your belief that Asian buying will put an automatic floor under Vancouver RE is just another version of “It’s different here.”The demand, Asian or otherwise, is being driven by cheap credit. And you’re right, I don’t have any solutions. It’s too late to raise interest rates and tighten up on CMHC lending standards; that should have been done a decade ago. Five years ago when I first started musing that maybe 5% down payments weren’t enough, I was met with indignation. Comments like, “I guess you don’t like seeing Canadian families being able to afford home ownership” and “Enjoy your rental suite” were the standard responses. And FIFTEEN years ago (yes, that long ago) when I mused that perhaps central banks were getting a little too reckless with easy money (when they lowered interest rates in response to the Asian crisis of 97-98) I was dismissed as a know-nothing. That I may well have been. In hindsight even I didn’t know how right I was about the dangers of loose monetary policy. I’ve been wrong much more often than I’ve been right, but I was NOT wrong about that.
@agsage,
http://tinyurl.com/7qlkpd4
you’re asking why the 11 city composite ticks up a hair after diluting van or van+tor share; which if those were the bubbliest markets, it should do the opposite. i suspect this has something to baseline reference pt or period in your chart. also, i don’t know what sort of assumptions go into these benchmark models for improvements, renovations and new construction.
In case you’re not following that older thread anymore: thank you Chubster, finally had a listen to that David Stockman interview. Great stuff, up until he told me to sell all my stocks
Seriously, nice to hear so much common sense about all this, dude is bang on.
he’s speaking of risk assets generically to a retail audience. many others have echoed similar – eg. bass, fleckenstein, faber, sprott, de-da-de-da. doesn’t mean all equities will dump and there are many ways to skin a cat. but you’d better know what you’re doing. for me the key looking forward is he is saying there is a structural constraint to this vendor financing model and we are seeing the end of it begin to play out. at some point the sovereign bond market and currency markets by association will unravel – already started. it could be quite violent as all these pressures have built up over decades. if you’re like me and believe, take your hedges and look for evidence that you could be wrong. ps. if you did not already, i’d definitely revisit ‘the end of sound money and triumph of crony capitalism’. it framed everything for me perfectly.
@Chubster Just gave that a listen too, very informative, thanks.
Ah, you are suppositioning a difference in determining whether the property really should have been included as pairs in the data set? A good of a thought as any.
From Teranet: They reject any sales that: a) non-arms-length sale, b) change of type of property, for example after renovations, c) data error, and d) high turnover frequency (biannual or higher).
I have actually no idea what is going on. A have a sneaking suspicion that it really is that all major Canadian cities have been sucking down the credit more or less equally, but starting from various price points. A 150% increase is harder to spot if you end up at a 300k average at the end of it. Looks darn affordable from inside the bubble.
would have answered on your site but don’t have a sign-on. anyway, there are a huge number of renos and teardowns in van at least. they are clearly data pts in the bubbliness that show up in the nominal stats. if fact, should nominal stats just be flat vs a suitable prior period, it would be a value loss considering the $s poured into improvements. if you are saying teranet excludes most of these, then the teranet data is surely underestimating the van component. imagine toronto is similar.
No problem. I just have open comments. I thought that was easier.
blogspot is pretty good about keeping the spam down.
Ah, I see, lack of pairs is your thought in Van. and less so in Tor, meaning too much data was tossed aside. This has been a criticism of Case-Schiller. Because the frothy nature of teardown and flip was not captured by the measure, it was slow to show the whole picture. On the other hand, for every finished scrape and 5k sq ft build, there are 8 other 17k houses on 1.8 million plots of land being sold, which IS capturing that frothy inherent land value, indirectly.
This is a great article from the NY times in 2005 about housing vs stock market….
http://www.nytimes.com/2005/08/19/realestate/19real.html?pagewanted=all
Seriously, look at that picture. Anyone from anywhere other than Vancouver will look at that and estimate $150-300 tops. This market is beyond insane.
The house itself is valued at $17,000. The value is all in the lot. So just looking at the picture doesn’t give you the whole, well, picture.
Yes, good point but really what is the productive/economic value of that tiny patch of ground?
You could buy a pretty decent farm for that money.
Here’s the exact opposite situation: just received my new assessment from the City of Calgary for my SFH (1100 sq ft – not incl basement!). YOY change: negative 15%. 4Y change: negative 33%. Expected next year YOY change: negative 10%. Potential 5Y change: negative 40%.
Sure glad I didn’t buy within the last 5 years. Sure glad I sold all the rest of my real estate investments when all the “kids” at work were talking about flipping as the best way to make money. Sure wish I was doing the same thing in Vancouver right now. I would bet some lucky sods are doing just that.
I’m curious-is there a similar change in your propery tax?
No, as the city always needs more revenue so the actual tax factor is always higher than the “revenue neutral” factor. For many, this has resulted in relatively no increase in taxes while the ultra-expensive areas have seen their taxes mostly rise quite substantially.
too bad; the place could have been yours right when you started the blog, VREAA. then this would not be called bubble, would it?
Weak effort, son.
Why the eff are you attacking our gracious host ? go start your own blog, oh i forgot you did – its one of the thousands of adverts on the backsides of public transit.
Fred, there are winners and losers in every bubble. And yes, people who benefit from bubbles are a lot less likely to see them as such. The whole point of this blog is to try to document reality for what it is, and to archive the effects of the bubble as it plays out.
But let’s not confuse this rise in property values for real wealth. It is not wealth, it is inflation. And like all inflation, it represents a transfer of wealth, not an increase in wealth. A transfer from those who bought in late to those who bought in earlier. The ones getting in late, with few exceptions, aren’t paying cash. They’re borrowing the money.
Precisely: Ponzi.
It always seems like a bizarre claim at this point in a bubble, but only a very very small percentage of owners will, in the end, actually have profited from the speculative mania. To do so, they have to take profits late in the game (either cash out or downsize considerably). All others will see their net-worth implode when prices plunge.
Those who cash out are taking money from the bank that some late-comer has pledged to pay back to the bank over their lifetime (at as yet undetermined interest rates). The net social effect is always a disaster; the bigger the bubble the bigger the disaster.
So yes, winners and losers, but, in the end, surprisingly few real winners.
What do u fear more?
A massive debt load?
Or being priced out?
Are you addressing anybody in particular?
They are good questions.
If you had to poll the general population, on the way up most would fear being priced out; on the way down most would fear the debt load.
In each case, the fear would reach maximum levels at the point where the market turns. This is the way sentiment changes through a speculative mania and its aftermath.
Many have overextended themselves into RE in Vancouver in recent years because the large debt load looks less frightening than the idea of being priced out.
Like junior equity investors finally jumping into a bull run because of the fear of missing out only to get crushed by the smart money who have been distributing their holdings into the buying rush. This is a simple fact. One should always fear / respect the power of leverage (debt) because it can destroy your life with no regard to your personal situation. There’s always a time to buy and a time to sell, there’s always another stock or real estate investment, there’s always another cycle, another boom and another bust. This is the way of markets.
A massive debt should scare any sane person more so than being priced out. The downside risks are too massive to ignore. But as we all have witnessed sanity is in short supply and risk aversion is non-existant.
A massive debt load is far more onerous. That normally serious people could consider taking on an obligation of several hundreds of thousands while earning several tens speaks to mass delusion in lotus land. Imagine saving that kind of money — impossible.
so true everyone. why is debt such a concern? it’s only money after all. for example what about christmas? once the bus reaches the final stop, the passengers must disembark…this is the way it works.
It’s only money! because the banks are giving it away free or so it seems and i’ve never worked a day in my life! wtf! smoke another fatty will you.