Derrick Penner, CanWest News Services - Victoria Times-Colonist, January 4, 2007
The number of real-estate millionaires in British Columbia's skyrocketing real estate market nearly doubled in 2006.
Data from the 2007 B.C. property assessments, crunched by Landcor Data Corp., shows that B.C. is home to 51,059 properties valued at over $1 million.
That figure was 26,557 in 2006.
The biggest group of new paper millionaires were homeowners. Single family homes worth more than $1 million totalled 38,027 according to 2007 property assessments, 18,459 more than there were a year ago.
And the number of condominiums assessed at more than $1 million increased by almost three quarters to 3,260 properties.
The B.C. Assessment Authority released its 2007 assessments Tuesday, which are based on property values as of July 1, 2006.
Provincewide, the data extracted by Landcor showed that single-family-home assessments increased just over 20 per cent on average, with many communities seeing increases that were much larger.
The average house in Tumbler Ridge in B.C.'s northeast shot up almost 73 per cent to $158,384. Vancouver's average house assessment, however, was up 23 per cent to $896,979, so Cameron Muir, chief economist for the B.C. Real Estate Association, said people shouldn't be surprised by the dramatic increase in million- dollar homes.
The run up in real estate prices over the last few years pushed many homes into the $800,000 to $900,000 range already, which "all bumped up over the year into the million-dollar range," Muir said.
Muir said B.C. Assessment's valuations cover the period between July 1, 2005, and July 1, 2006, which was "one of the strongest 12-month periods" as there has been in the current real estate market cycle.
Muir added that assessment increases are only "paper profits." "It's the equity in your home. Today it may be high, [but] the market may change," he said.
However, Muir added that homeequity gains do fuel the economy in so far as homeowners feel wealthier and are willing to spend some of that perceived wealth.
That notion is called the wealth effect, Muir said, and people are likely to spend five cents of every dollar that their net worth increases. Muir believes the economy is still performing well enough with enough job and income growth to support real estate markets through 2007.
Landcor president Rudy Nielsen said there are significant outside influences in B.C. real estate. Albertans, he said, bought about $1.5 billion worth of second homes in the province making it "Alberta's playground." Nielsen, who also heads the recreational- real-estate firm NIHO Land and Cattle Co., said he has seen a big increase in the number of Americans from the San Francisco and Los Angeles areas buying homes for more than recreational purposes.
"They're buying secondary homes, what I call safe houses," Nielsen added. They see B.C. as a safe haven from their fears over global terrorism.
Andrey Pavlov, a Simon Fraser University business professor currently serving as a visiting scholar at the Wharton School of Business at the University of Pennsylvania, said expensive real estate has shot up in value the world over.
"Within Vancouver, the expensive areas have increased more than proportionally," Pavlov said.