Banff property values spike by 'astronomical' 17%

Banff property values have been increasing steadily year over year, but the latest assessment may have given homeowners a bit of sticker shock.

Increase is more about land values than property values, says expert

Banff's property values jumped 17 per cent from 2016 to 2017. (Evelyne Asselin/CBC)

Banff property values have been increasing steadily year over year, but the latest assessment may have given homeowners a bit of sticker shock.

Residential property assessments increased 17 per cent from 2016 to 2017, up from a 5.6 per cent increase the previous year.

A comparison of the total taxable residential property assessments for the Town of Banff, from 2013 to 2017.

"In terms of the increase in values, it has been astronomical ... probably over the past two-and-a-half, three years in Banff," said Christopher Vincent, senior vice president of sales with Sotheby's International Realty Canada in Banff and Canmore.

"We're definitely heading in the opposite direction of a lot of Alberta markets, in that values have had substantial increases."

The area of town that saw the biggest increase was Muskrat Street, where home values spiked a median 31 per cent. Close behind was Cave Avenue, which saw a median increase of 28 per cent. 

Homes in the area of Muskrat Street, in red, and on Cave Avenue, in orange, saw the biggest median increase in property assessments. (Google Maps)

Condos also went up in value, with a median increase of 17 per cent. 

Chris Hughes, the town's manager of finance, said in many cases, the jump is due to a significant increase in land values.

"There have been quite a few sales in the last year or two that indicate that the actual value of property, and specifically in land value, have increased substantially over the last couple of years," Hughes said. 

"These are cases where a developer is coming in and buying a lot that has a building on it and the building has very little value to them. They're in most cases tearing it down and building or adding density to the property."

Banff has strict development restrictions. Buildings cannot be more than three storeys high and the town boundaries cannot be extended. (Evelyne Asselin/CBC)

Banff has a population and development cap set by Parks Canada — the town's vacancy rate hovers around zero per cent — putting housing in high demand. 

Vincent said the increase is explained by homes catching up to their true market value.

"I think there was probably a lag on the assessed values compared to the market. Assessed values are a challenge because they are at one fixed point in time during the year, whereas the market is dynamic and growing every day or changing every day," he said.

The increase doesn't necessary mean a big windfall for the municipal government, nor does it mean that property taxes will all go up 17 per cent. 

"It's part of a misconception out there that because there was a 17 per cent increase in residential assessed value that people's taxes are going to go up 17 per cent. And really that's irrelevant to the amount their taxes are going to go up," said Hughes.

A 'For Sale' sign sits outside of a Banff home in 2015. (Evelyne Asselin/CBC)

Hughes said people should think of the assessment as how big of a piece of the taxation pie each homeowner pays relative to their neighbours. 

"If it's gone up the average amount, you're gonna see an average tax increase. And it's not gonna be necessarily the same percentage that increased your assessed value."

The total taxable property value for both residential and non-residential properties in Banff was $2.8 billion in 2017. Residential properties accounted for $1.6 billion of that total. 

With files from Anis Heydari