Region's home values rising, but behind provincial rates - Cambridge Waterloo

Jeff Outhit, Record staff
Sat Sep 29 2012 07:50:00

Region’s home values rising, but behind provincial rates

Cambridge
Catherine Farley

Waterloo

Kitchener
1 of 3
  WATERLOO REGION — Local homes have gained value at almost twice the inflation rate over four years,
despite an uneven economy.

However, they are not rising at the provincial rate and the upswing among cities is uneven, with Waterloo
leading the way and Cambridge last.

Average residential values increased 15.4 per cent across Waterloo Region between 2008 and 2012. That’s
according to a reassessment of property values, completed by a government agency to help determine
property taxes. A brief real estate downturn in 2009 did not last.

By comparison, Ontario housing values increased 18.5 per cent. Consumer inflation rose 8.4 per cent over
the same period. On average:

• Waterloo housing values are up 17.8 per cent.

• Kitchener housing values are up 17.4 per cent.

• Cambridge housing values are up 11.7 per cent.

Three factors help explain why this region is not keeping pace with the provincial housing market, said Larry
Hummel, chief assessor of the Municipal Property Assessment Corporation:

 • Southwestern Ontario has struggled in the manufacturing downturn since 2008. Lost jobs, trimmed
incomes and faltering growth dampened housing increases.

• Hotter housing markets in the Greater Toronto Area and Ottawa lifted the provincial housing average.

• A mining boom in Northern Ontario fuelled higher home prices, lifting the provincial average.

The assessment agency is sending letters to 160,000 owners in the region with the estimated value of their
home as of January 2012. The value will be used to calculate future property taxes. Estimated values for
business properties come later.

Know this — Just because your home is worth more, it does not mean your taxes will rise. Rather, what
matters is how your increase compares to the average increase.

If your property value is increasing faster than average, your taxes can be expected to rise. If your property
value is increasing below the average or has decreased, your taxes may decrease. Expect little change if
your property is near the average.

Assessment increases will be phased in over four years starting in 2013. This means tax changes will be
phased in over four years. If your property is worth less than in 2008, the assessment decrease will apply
immediately, including any tax decrease that follows a reduced assessment.

Tax calculations for 2013 are months away. Reassessment has a key impact, but taxes also depend on rate
increases that municipal politicians have yet to decide.

Property reassessment provides no extra money for governments — it redistributes the same taxes.

“There’s no windfall here,” Kitchener Coun. Tom Galloway said.

The latest estimated value is based on home sales and new developments in your neighbourhood. It may
also reflect changes made to your property. There’s a process to challenge it if you disagree.

Municipal politicians are bracing for inquiries.

“There will certainly be some outliers,” Cambridge Mayor Doug Craig said.

He anticipates complaints from owners facing high increases and from taxpayers demanding that councillors
justify new property estimates.

“They just look at you and say it’s your fault,” Craig said. The agency that prepares assessments is funded
and run by municipalities.

The Record analyzed the latest reassessment to determine key local impacts.

Local education taxes will generally fall.

Taxes include education taxes set by the province. In this region, those generally account for just under one-
fifth of property taxes.

Because the average regional increase in home values (15 per cent) falls below the provincial increase (19
per cent), the share of education taxes paid here will fall and the share paid elsewhere will rise.

“It will be moderately beneficial,” Hummel said.

The actual tax impact will vary for each property.

High-tax Waterloo will pay even more.

Owners in Waterloo and Kitchener will generally pay more regional taxes, while Cambridge owners will pay
less. That’s because Waterloo and Kitchener values are increasing faster than the regional average of 15
per cent, while Cambridge values are increasing slower than the regional average.

Regional taxes account for about half your property taxes. The actual impact will vary for each property.

Waterloo is already the most highly taxed city largely because its properties are worth more. The average
Waterloo residence is now worth $365,600, well above the average Kitchener residence at $291,500 and
the average Cambridge residence at $284,900.

Cambridge property values are falling behind.

Home values in the city are up 12 per cent on average, well below regional and provincial increases.

The loss of manufacturing jobs may have hit Cambridge harder. Hummel suspects “the community that
resides there haven’t seen their incomes rise and maybe have had trouble getting a job.”

The upside to falling behind is that education and regional taxes will shift out of the city.

Brighter spots in Cambridge are west Hespeler near Highway 401, Preston homes near the Grand River and
Highway 401, and established neighbourhoods in west Galt. Increases in home values are approaching the
regional average.

City and township tax impacts vary.

Taxes levied by your local city or township account for about one-third of your bill. The impact will depend on
how your home value compares to the average increase within your municipality, not the average increase
within the region.

Central neighbourhoods in Kitchener and Waterloo are outpacing outlying suburbs.

Home values are rising fastest in older, central neighbourhoods flanking King Street and north of Victoria
Street. These neighbourhoods will take on a higher share of property taxes.

Several factors may be in play. Central properties are often cheaper. Many have larger, desirable lots.
Commuter distances may be shorter and cheaper.

As incomes falter, cheaper, older homes in established neighbourhoods may become more desirable, in
particular to first-time buyers. Conversely, suburban homes with heftier commuting costs may be beyond the
reach of some buyers.

In Kitchener for example, family homes in established neighbourhoods north of Victoria Street, worth just
over $200,000, are up 21 per cent, while newer $1-million-plus homes in Hidden Valley in south Kitchener
are up 13 per cent.

This means smaller, older, cheaper homes can be expected to pay more property taxes as sprawling
mansions will see their taxes fall. Expensive homes will still pay higher taxes, but the gap will narrow.

Rail transit, launching in 2017 for $818 million, is meant to make central neighbourhoods more desirable by
putting trains on streets to improve mobility. Property values are increasing at an above-average pace in
many central places where tracks are planned.

“It isn’t happening everywhere, but it’s happening in those communities which are trying to create a
downtown or create a more dense urban environment,” Hummel said.

Waterloo condominiums are outpacing other housing, their values up 21 per cent. Some are in central
areas, helping to increase central values. Investment in universities, including new student housing, is
driving up values near campuses.

“Around the university towns, we’re seeing price appreciation,” Hummel said.

Suburban Beechwood in Waterloo continues to be desired, with values up 21 per cent. Outlying Waterloo
suburbs are generally rising at or below the average pace. That’s the same for outlying suburbs in Kitchener.

jouthit@therecord.com