Correcting BC's Private Land Market with a Crown Land Release.
British Columbia has both an ever increasing population and a prevalent lack of saleable, privately owned land. BC’s population growth outpaced five other provinces and increased by 5.6 per cent over four years from 2011-2016. The provinces 4,648,055 citizen count has shown steady growth with an increase of between 5%-7% every 5 years since 2001. All those new citizens need places to live, work, shop and play, and the buying pressure on the existing available landholdings has produced the high priced market prices we currently have. Policy makers have implemented several ineffective, short sighted courses of action including; the Foreign Buyer Speculation Tax, the B20 Mortgage Stress Test, the Shared Equity Mortgage Provider Fund, and the First Time Home Buyers Incentive Program to address the issue and make housing more affordable. Unfortunately, owning even a small property title and home has become un-attainable for many hard working BC citizens.
There is another simple, viable and implementable option for the provincial government to explore that would balance the affordability of market prices and increase the accessibility of land ownership to all British Columbian’s. Converting renters into first time and lower income home and property buyers that would be contributing to municipal land taxes and helping to sustain and grow communities as “land and business owners”.
That option, is to release specific Crown Land holdings into the privately owned provincial percentage. Increasing the amount of private saleable land would help to alleviate the current pressures facing our real estate market. There are land holdings in BC that do not fall into the Agricultural Land Reserve, Indigenous Land Claims, or Federal Parks & Interests that could be released to increase availability and decrease pricing pressure. At this time 94% of the land in B.C. is provincial Crown Land, 2% of which is covered by fresh water. Federal Crown Land makes up a further 1% of the province including; Indian reserves, defence lands and federal harbours The other 5% is privately owned! That’s right, the privately owned land holdings in this province make up only 5% of the entire land mass. In Alberta crown land is called “publicly owned land”, 60% of which is provincial public land and 28.5% is privately owned, and federal public land covers the remaining 10% of the province. Looking further east, 90% of land in Manitoba is Crown land with the remaining 10% being private. As a whole less than 11% of Canada's land is in private hands; 41% is federal crown land and 48% is provincial crown land.
The BC Ministry of Forests, Lands and Natural Resource Operations has a mandate to ensure that the public benefits from the use or sale of Crown land. This Ministry issues Crown Land tenures and sells Crown Land on behalf of the Crown in Right of British Columbia. The 94% Crown land distribution in BC is broken down into regions, and regional municipal planning takes a precedence in consideration. Crown Land provides the country and the provinces with the majority of their profits from natural resources, largely but not exclusively provincial, rented for logging and mineral exploration rights; revenues flow to the relevant government and may constitute a major income stream, such as in Alberta. Crown Land may also be rented/leased by individuals wishing to build homes or cottages.
Why isn’t the provincial government exploring this option, to help correct market growth and pricing by offering citizens a stake in province they work hard to live in? According to the Ministry, Crown land is a public asset and the Province has a responsibility to ensure it is managed to maximize and sustain the flow of economic, social and environmental benefits to British Columbians, now and into the future. An additional 2% release of Crown Land into the private holdings would have an immediate and lasting impact on the market as a whole. The uplifting economic benefits to the entire province would be incalculable. The released Crown parcels could be ear-marked for specific types of qualifying multi-unit and single family affordable housing which could actually be affordable! The land itself should not be more valuable that the well being, health and economic growth of its citizens and communities.
In setting prices for Crown land, the province has a responsibility to not distort private land markets, but, if the private land market is in need of a correction, is this not a ready and viable option worth exploring. Everyone including private and government land stakeholders would prosper greatly from an economic boost due to construction of affordable housing. Should only the Sovereign Crown, government, bank/mortgage lenders and the already wealthy prosper and benefit from the land in this province and not new generations of tax paying citizens?
It used to be the way that young families got their start, they would buy land and build a home and cultivate their properties while helping to grow their local economies where they resided, shopped and lived. No matter which way the pie is sliced, the government requirements to purchase and own bare land holdings are beyond most young adults reach. When buying a house on land, you have to put at least 5% down, or 20 percent or more if you want a loan without mortgage insurance. When you’re taking out a bare land loan, between 25 and 50% down is required. At a time when many millennials are unable to move out their parents homes, let alone save up large cash down payments to buy or build their own.
It is regretful to conclude that the policies in place have only one purpose, and it appears to ensure that the Crown and Government collect the bulk of monetary gain from every aspect of the provinces land holdings. Unfortunately, the rapacity of the existing private landowners and governing bodies is ultimately forsaking and eroding the quality of life for young families and aging citizens. Land in BC will always be sought after for its diverse revenue capabilities, it is time for policy makers to look further than new taxes or government prospering programs to make BC landholdings actually affordable.
Buying Recreational Property In B.C. What Type Of Recreational User Are You?
Published May 2019
Relaxing in your hammock under the forested canopy by the side of a glistening lake shore may be what fuels your recreational property dreams. BC has the most unique waterfront and recreational properties for sale, located in breathtaking settings across of the province. Finding the perfectly located recreational property that suits your lifestyle, budget and outdoor activity needs now and into the future can be a challenge. The ultimate location will allow you to enjoy the maximum amount of recreational time, with the minimum amount of travel time, maintenance and money. Remember that the rest of the family may have very different ideas about how they want to spend their weekend getaway time, and making the most of your recreational time is what having rec-property is all about.
That being said the location of your recreational property to your full time home can be the biggest consideration. If you have to travel overnight or more than 5-6 hours to get to the property, you are likely to spend less weekend time there and only make a handful of planned trips a year. Realistically determining which regions of the province to look in should be the starting point to finding your recreational dream land. Vancouver Island has breathtaking mountain and ocean view properties, a mild climate, and year round ferry access from the mainland. The Fraser Valley’s Harrison Hot Springs and Harrison Lake area offers Lower Mainland residents an easy to commute to semi rural paradise of lake view and lake front homes that make ideal rec properties. The Thompson Okanagan and Similkameen regions are famous for their lakes, beaches and summer sunshine and some of the best winter ski and snowboarding mountain resorts. If your soul craves a more remote natural setting the vast Cariboo Chilcotin region of the province is within a days drive from Vancouver and boasts many hideaway cabins & acreages set amongst countless lakes. The Cariboo has long been sought after as an outdoors man’s paradise where you can explore, fish, ATV and hunt in rugged remote beauty.
Once you have selected your region of choice the next step is to Identifying what it is you see yourself doing at your property for recreation fun? One must consider that you and your families needs will grow and change, and so will the activities and hobbies you will want to partake in as years go by. The first step is to make a list of the things you want to do when you are at your property and this will determine if you are seeking a seasonal property for spring/summer/fall or if you require a property with winterized accommodation and year round access. Making sure your rec property location is adjacent to or very close to your main activities will allow you to spend more time doing whatever it is you love to do. For many folks being on the water is what recreation is all about, being out on lake in the boat fishing or kayaking and paddle boarding is what fills their soul. If being on the water is where you will want to spend the majority of your time then finding suitable waterfront or lake-view property is where you will want to focus your search. Outdoor motorsports enthusiasts need access to trails and remote roads to ATV and dirt bike on, and snowmobile on in winter. If you are going to want to spend the majority of your time on your ATV exploring, then finding property that has direct trail access will save you countless hours of packing up trailering loading and unloading your unit just to enjoy your favourite pastime. We are spoiled with endless year round outdoor activities and every family is as unique in their interests.
Now that you have identified what types of outdoor recreation you will be partaking in and where in the province you are going to start looking the next step is to contact your bank or mortgage provider to find out exactly what you can afford to spend on a recreational land. Many recreational property dreams are quickly dashed when buyers learn that the lending rules for secondary and bare land holdings are extremely strict. As secondary and rec property mortgages are gauged by a different set of rules that your existing home mortgage. Buying bare land without any current services or dwellings on it is an even stricter process, as banks and mortgage lenders deem these purchases as “high risk” and qualifying under these strict guidelines means that you will have to put down anywhere from 20 to 50% down payment on bare land to secure the rest of the financing, and even then you may have to seek a private lender to obtain it. Furthermore, you will have other expenses in setting up the new location to your liking.
Once you have determined the mortgageable amount you can borrow you can narrow your search and determine what properties in what areas you would like to book viewings at. That said, this is just the beginning of scrutinizing each of these properties to ensure they are actually worth pursuing. Before your initial visit to the area it is important to research nearby towns, amenities and even when you are there your should investigate potential neighbours. The pristine environment surrounding the property you are planning to purchase may be slated for a new 20 lot subdivision or planned logging activities will be removing most of the surrounding forested areas in the near future. The property could offer you that hammock in the trees by the lake shore, but if the waterfront is crowded and noisy most weekends or the access road has constant traffic your relaxation level just tanked and it may be a sign to keep looking. Extensive due diligence in rural land ownership is now your next step in vetting which properties suit all your needs and will remain a great investment for now and into the future.
Join me again here next month as I continue to give explanation and insight into selecting and vetting recreational land investments, starting with purchasing waterfront propertry for a second home, cabin or RV lot.
Published June 2019
Recreational property ownership is all about having a place to unwind & relax, enjoy family, and get outside for some adventure. With so many activity options an investment in a resort property will give growing families years of enjoyment, and an option to rent out your property when not in use to help pay for the expense. A resort property can provide an excellent location for year round enjoyment with access to urban amenities and summer and winter outdoor activities. BC has many designated resort locations and resort communities that have grown up around ski hill mountains, large lakes and hot springs.
Foremost, ski resorts have transformed into all seasons playgrounds that bustle with spring festivals, summer markets and live music. Summer at the hill gives you outdoor adventure choices such as mountain biking, alpine hiking & golfing. There are several regions in BC that offer ski hill property ownership. Starting in the lower mainland, the sought after ski weekend get-away is in Whistler Blackcomb. Within a four hour drive of Vancouver is Sun Peaks Resort, near Kamloops. The second largest resort in BC offering all kinds of winter powder play and an outdoor public pool and golf course. The Okanagan Region has Silver Star Mountain Resort near Vernon, and Big White Resort is nearest Kelowna. Situated in the East Kootenay Rockies about four hours from Calgary, is Panorama Mountain Resort, and the Bavarian theme resort town of Kimberly is in the Purcell Mountains of the Kootenay Region about 20 minutes from the Cranbrook International Airport. In addition, picking a mountain region that can be reached by more than one mode of transport adds flexibility, making transportation during peak holiday times easier.
There’s not much difference between a ski resort chalet and a typical vacation getaway home except for location and the steep slope of the roof. With a resort chalet, as with typical vacation homes, you are responsible for the upkeep, including what’s beyond the walls including snow removal, yard work, and trash removal, all of which add to the expenses of your mortgage and property taxes. The other attractive option is the ski resort condominium, which will be part of a strata association. Condominium property owners are charged condo strata fees to cover external upkeep and you don’t have to cut grass, or worry about snow plowing or snow shovelling or taking the trash to the refuse site. Condos, which are usually multi-floor townhouses or one-floor apartments come with shared amenities, such as a pool, games rooms, or a gym. The downside to a condo can be the privacy factor, if you need complete privacy to relax and find zen, a detached dwelling will best suit your needs. A major consideration should be the distance to the ski lifts, ski-in-ski-out access is highly sought. If you will be renting out the unit, having ski-in-ski out adds to the amount your unit will rent for. If not an option, consider a condo that is on the chair lift shuttle route.
In contrast, purchasing a lot in a lake side RV resort offers waterfront with all the play and less than half to pay. Your motorhome, 5th wheel, trailer or camper becomes a hassle free getaway, and you don’t have the expense, responsibility or maintenance of a vacation home. You don’t have to pay for RV Storage, or pack up, hookup, tow/travel and pay for gasoline or camp site fees. You leave your RV on your own lot, set up and hooked up to power, water and sewer services, and the upkeep of the rest of the property is taken care of by the resort. This type of recreational property ownership has gained allot of fellowship over the years and become micro-communities. The Okanagan, Shuswap and the Fraser Valley have numerous resort properties to consider. Make sure you fully understand what type of ownership is being offered in the sales contract. RV lot resorts each have their own ownership structure and rules.
Similarly, the draw to vacation near water has many seeking landholdings at the handful of amazing BC hot springs resorts and resort communities. Halcyon Hot Springs, Nakusp Hot Springs and Ainsworth Hot Springs in the Kootenay Region make up a chain of mother natures most sensational soaking experiences and they are located along side hundreds of miles of lake view and waterfront property on both Arrow and Kootenay Lakes. There are even a few exceptional waterfront landholdings that have their own water rights to the Halcyon Hot Springs. They enjoy a panoramic Arrow Lake view from their cottages as they soak in their own private natural hot spring pools. Alternatively, the best of both worlds is located only a few hours east of Vancouver in the Fraser Valley Region, the crown jewel of Hot Springs. Revered, Harrison Hot Springs which has grown to become a sizeable resort community, sits on ultra scenic Harrison Lake, known for its water sports and mountain backdrop. If you live in the lower mainland, Harrison Hot Springs is the perfect resort community to own rec property in, with Harrison Lake, access to the Hot Springs and outdoor recreation in the surrounding forested mountains Harrison offers it all close enough to enjoy every weekend.
In conclusion, BC has many diverse types of resort property ownership, and as in any real estate transaction you are responsible for due diligence in knowing exactly what is being offered for sale. I urge you to research everything you can about the resort you are considering purchasing recreational property in, and inquire with the people who are already recreational residents. Ask them what they love and dislike about their resort community and surrounding area. As always use a trusted and knowledgeable realtor to help you with your search, vetting and purchase.
Published August 2019
Being the owner operator of an accommodation lodging can offer a very lucrative and rewarding lifestyle that allows you to be your own boss while creating un-forgettable memories for thousands of travellers every year. There are many investment opportunities to become a part of this multi-billions dollar industry as numerous operators are nearing their retirement and looking for new owners with new ideas and enthusiasm to continue their legacies. If it’s time in your life to semi-retire, or you want a change of pace from the hurried urban lifestyle, owning a rural resort, commercial accommodation property, B&B or campground could be the lifestyle change and solid future investment you are looking for. With a passion for hospitality, a solid marketing plan and the ultimate location you can bring your resort ideas to fruition. Purchasing an existing resort or tourism accommodation property is easier than a bare land startup from a financial perspective, you will be fully operational and turn a profit sooner. An established location comes with existing dwellings, infrastructure, services, clientele and marketing, all to your advantage.
The tourism accommodation and hospitality industry in B.C. is large and diverse, and every year thousands of travelers from all over the world come to Super Natural British Columbia for their dream vacations. The biggest portion of visitor spending, 25% to 30%, is spent on accommodation, and those visitors are looking for that one-of-a-kind lodging that will let them experience the natural adventure that is B.C. is famous for. Travelers crave authentic experiences! Intimate surroundings and welcoming friendly service from their hosts.
There are hundreds of different types of lodgings and accommodation choices when planning a trip through this province, from luxury urban hotels to wilderness lodges, guest ranches, guide outfitters, bed & breakfast’s and niche recreational resorts catering to outdoor adventure activities.
In recent years the new RV Rental Industry has generated a large segment of visitors who are touring and exploring BC on their own. For many travelers, being able to directly engage with BC’s raw nature is why they chose to come here. We often take for granted our diverse surroundings, wildlife and all the amazing outdoor recreational activities that we have to choose from year round. According to the Camping and RVing British Columbia Coalition, BC is home to 340 vehicle accessible campgrounds managed by the BC Society of Park Facility Operators, and Destination British Columbia inspects and approves over 500 campgrounds across the province. Seven national parks within the province contain an additional 14 campgrounds, and the BC Recreation Sites and Trails Branch manages more than 1,200 back country sites including campgrounds and other facilities. The over 300 privately owned RV parks and campgrounds host a mixture of longer-stay residents and overnight guests.
This province is fortunate to have so many dedicated commercial tourism accommodation operators who strive to provide the ultimate guest experiences at their unique establishments. In cases, such as at a remote resort lodging, the operator is guest services, and may represent a person’s entire vacation experience. Today travelers are savvy and seek out the most unique accommodations and experiences guaranteed to make unforgettable holiday memories. A few examples of one-of-a-kind BC tourism accommodations include; Goldenwood Lodge Teepees in Golden, where visitors sleep in traditional teepees with a fire pit overlooking the majestic Rocky Mountains, sleep suspended in a whimsical handcrafted sphere tree house in Qualicum Beach at Free Spirit Spheres, or soak day and night in your own private halcyon hot spring pools when you rent the waterfront Hot Spring Escape Chalet on Arrow lakes Galena Bay, BC.
When viewing potential properties keep in mind your goals. Short term does the property have the potential to be a viable profitable sustainable business with your ownership? Long term, when you retire do you plan to sell and move on, or subdivide and sell titles of the acreage to fund a comfortable retirement living? Once you’ve found a few that really stand out, stay at the resort or accommodation as a guest for a few days. Try to do this before anyone is aware that you are considering the property’s this will give you the opportunity to view the property as a guest would.
Know the zoning, find out if the property is sub-dividable, in the ALR, or has any other regional restrictions that would hinder your future plans. A qualified accountant to help you examine the businesses financial records and analyze them to mitigate your risk. A professional inspection of the entire property all the dwellings, services that are above and below ground, as well as examine in detail any environmental bylaws, water licenses, permits and building code compliance. This may also help you figure out how you will renovate any existing structures to meet your exact needs.
Look at the financial statements for the past two or three years and occupancy rates and expenses for running the business. Verify all financial information. Look at the financial statements for the past two or three years. Compile the occupancy rates, room rates and expenses for running the business. As always, verify all financial information.
It is usual for the buyer to have a 30 day study period, and this is usually set down in the letter of intent or the agreement of sale. Use this period to check things out to your satisfaction. In conclusion, always work with a confident and knowledgeable commercial realtor and a reputable Solicitor to help you navigate the documentation that accompanies a commercial property portfolio.
Buying Waterfront Property - Finding that perfect shoreline.
Published June 2019
Buying waterfront recreational property in BC is the dream of so many homeowners. Luckily, BC has thousands of different waterfront landholdings; from seaside properties on the Sunshine Coast and Vancouver Island, to owning beach front in the vibrant sunny Okanagan, to cozy cabins and R.V. lots on lakes all the way north up through the Cariboo. Waterfront property is special for its shoreline access, and is always more expensive to purchase and maintain. But the benefits of waterfront views, the connection with nature, and years of family fun swimming, kayaking, boating & fishing is worth the extra time and money spent for many people. The waterfront lifestyle is an amazing one! Finding the perfect shoreline for your needs and lifestyle is the key to fully enjoying your rec-property.
Foremost, get specifics about the lake or river as water bodies can vary considerably. Some excellent questions to find answers to include; Is the bottom rocky, sandy or muddy for swimming? How busy is the lake during each season and what recreational opportunities are available on the lake? Is the lake stocked with fish, are there any motorized restrictions for boaters, and what is mosquito season like? Does the lake freeze solid and offer winter activities like fishing and ice skating and snowmobiling? Remember what type of rec user you are, and find a water body that suits your recreational needs. If all the kids wake board, then you need a big enough lake that you can run a large ski boat and make that type of wake action safely away from other boaters and sensitive shorelines. Be very specific about your needs, it is important for the success of your ownership happiness!
Knowing all you can about the area surrounding the body of water is important, as the lake or river front community will become your own. Purchasing waterfront property warrants a comprehensive examination of more than the property itself, you are buying into a community and there are additional responsibilities to the ownership other than the higher property taxes. Waterfront owners must adhere to specific federal, provincial & local municipal regulations and practice stewardship of the water body as adjacent landowners.
Secondly, Find out if there is a homeowner’s association or other organization that controls the lake area where you plan to buy. The last thing you want as a buyer is to find out there are things you were counting on being able to do and are not allowed. Having a lake association can be a good thing, as they are formed to protect the lake’s future and resolve any issues that potentially could threaten the lake’s health. They apply for grants to protect or improve the lake, as wells as monitor the lake for any invasive species. A great deal of waterfront land in the province is developed and privately owned and having local associations upgrade boat launches and create access swimming areas with trash collection helps the lake ecosystem handle the increased recreational usage.
Furthermore, you should examine the lake’s water levels and determine if the lake floods in spring. How close is the cabin/cottage/RV to the flood line or is the property located in a flood plain. Will you be required to carry flood insurance? It is important to assess how easy it is to access the shoreline and how easy is it to get your boat in and out of the lake. Are you allowed to have a launch site and dock right off of your own property shoreline? or do you travel around the lake to an access to launch?
Waterfront owners should be aware that; all water in B.C. is owned by the Crown and strictly regulated, and the general public has a Right of Access to Foreshore. As property lines extend to, but do not include the foreshore, the upland owner has no rights to use or “possess” the water, only a right to access. Waterfront boundaries can change as The Crown owns all property which exists below the high water mark therefore if the high water mark changes, the property boundaries will change as well.
Note the orientation of the property to the sun and any large treed areas, does it get morning or afternoon sun, and how it sets. How do the winds coming off the lake effect both your enjoyment of the property and the heating costs? Not all days on the lake have sunshine and blue skies and exposure to colder temperatures with higher winds means this will effect your comfort summer and winter. The closer you are to the water the less privacy you have and the easier it is for boaters to see your home, if you crave privacy seek a home site that is set back higher on the property.
Due-diligence should be carried out when purchasing any landholding. Vetting an existing recreational dwelling with older services takes even further careful critical examination. In some lake front communities the housing can be a mix of seasonal vacation style cabins and cottages expanded upon and turned into more permanent residences. If not kept in good repair with regular maintenance, the close proximity to the lake can lead to property damage. Some lake side homes are built to be used only during the warmer months of the year and constructed many years ago to questionable building codes. If you want to use the home during winter months make sure it was built for year round living with insulated floors, walls, water pipes and heating options. Upgrading an existing seasonal residence for winter living can be very costly. Quite often, local zoning can vary quite a bit on a lake, sometimes the size of the lots are smaller than lot sizes in non water front location. You may have grand visions of adding a large addition, and discover it’s just not possible, find out what you can and can’t do before purchasing. Waterfront property has its own strict building codes for the age and condition of septic systems and waste water disposal, and this should be one of your main areas of concern. The age and condition of the septic and drainage field needs to be independently inspected and certified up to code. Upgrading the septic can run up to $20,000 depending on where the system is located in proximity to the waterline.
If you are purchasing for recreational use now and planning to eventually live there year-round when you retire make sure you have given special consideration to things like proximity of the Hospital, medical care, grocery stores and restaurants. Getting out of town into the middle of nowhere may be great for a few months at a time, but not everyone enjoys such isolation on a year-round basis. Winters in some parts of the province see temperatures below -25 and up to 8 feet of accumulated snowfall and unless you enjoy keeping the fireplace full of wood, plowing the driveway and outdoor activities like ice skating, ice fishing, cross country and downhill skiing and snowmobiling your could end up with serious “cabin fever”.
In conclusion I urge you to take the time to really investigate all the components of each unique property you are interested in. If possible, go talk to the neighbouring property owners. Talking to your potential neighbours can give you valuable information that a viewing with a realtor cannot. Circumstances that you might not have thought of like, the public lake access beside the property gets very busy on weekends and you would constantly have to deal with many people and boats being launched in your direct vicinity. Ask what they like and dislike about owning property there? First hand information is very valuable and can help you avoid a purchase in a location that will not meet your expectations.
Locating property with the perfect shoreline is a very involved task. Always work with a qualified knowledgeable realtor and read and research everything you can. The time and effort spent pay off, when you end up with a waterfront dream location that allows for many years of happy family memories.
2019 BC Assessment Authority reports a decrease in taxable farm land value.
Published February 2019
The 2019 BC Assessment Authority reported a reduction in farm land taxable values for all regions of the province in their January Assessment reports. This can be misinterpreted when you are unaware of how and why B.C. Assessment collects and processes its findings. Only the “land” itself that is approved for farm status is included in this farm land value calculation. Meaning that you may have a 5 acre farm and only the 4 acres in agricultural production are assessed as farm. The other 1 acre of land is used for residential purposes and is assessed in the Residential Value category in that regions statistics. This is known as split classification. It is the mandate of the BC Assessment authority to process all farm status applications and accurately represent the “farm” land counted in its statistical data meant for property taxation purposes. When a property is classified as farm by B.C. Assessment, the value is assessed at rates set by the provincial government. The assessed value is lower than the assessed value for residential, commercial or industrial land. This results in lower property taxes, and is one of the methods used by the B.C. Government to encourage farming. B.C. Assessment uses legislated Farm Land Value Schedules set by the Lieutenant Governor through the Assessment Act, LAND VALUES FOR FARM LAND REGULATION. The Land Value Schedules rate land according to “land capability” or “soil capability” and respectively to “Soil Capability Classification for Agriculture. It is through this method that the taxable land value of each farm status property is determined.
The figures released by the B.C. Assessment Authority for 2019 is ultimately showing that farm land taxation values have seen a reduction in every region. Farm land is not assessed at market value, but at its value in farm use only, without regard to its value for other purposes. The overall market value of farm land has not decreased in the province. Farm Credit Canada historical statistics report that B.C. Farm Land has increased in market value every year since 2011. Over the last seven years the biggest valuation increase was in 2016. In 2017 the FCC data reports the Vancouver Island market having very few properties for sale in 2016 and 2017 and that the bulk of sales was in the area of farm land expansion of existing producers.
BC Assessment historical stats show Property Count by Property subclass. In 2016, 09-Farm land total property count was 51,560. In 2017 that number increased to 51,817. In 2018 a decrease in the amount of farm property counted at 51,043. This decrease of 774 farm properties was again reduced another 43 properties in the 2019 count for a current total of 51,000. The reason for this decrease in assessment counts of farm status land could be attributed to several factors. Being a voluntary program, in any given year, there are farms that no longer qualify or the applications are not received or not assessed in time to be counted. This makes the BC Assessment farm values and property count fluctuate year to year. The reduced count could in part be attributed to farmers and ranchers who have retired over the past couple of years. Furthermore, farm and ranch land has become increasingly sought after for uses other than agriculture. The Fraser Valley and Vancouver Island have seen unprecedented urban growth and agricultural farm land has seen increased pressure by residential development and applications to change property zoning to remove it from the Agricultural Land Reserve.
The ALR was created in 1973 to protect 4.7 million hectares of farmland, because only five per cent of B.C.’s land area is considered suitable for agriculture. At that time more than 6,000 hectares of farmland was being lost to development each year. Since its inception in 1973, the Agricultural Land Commission (ALC) has considered over 45,000 land use applications to remove land from the Agricultural Land Reserve (ALR), to subdivide land within the ALR, to use agricultural land for non-farm purposes or to include land into the ALR. The ALC reviews 500 to 700 new applications each year.
The provincial government tabled new legislation in November 2018, and If passed, Bill 52, the agricultural land commission amendment act, 2018, will strengthen protections for B.C.’s Agricultural Land Reserve. It will address issues facing our agricultural land including the purchase of farmland for large residential residences and the dumping of construction debris, toxic waste and other fill in the ALR that can irreparably damage arable soil on valuable farmland, through increased penalties. All owners of land used for agricultural purposes in B.C. are urged to apply for farm status with the B.C. Assessment Authority, it helps identify where the changes in land use are, keeps farm land taxes lower, and ultimately strengthens the agricultural industry in our province.
Due Diligence - Risk Mitigation For Buyers
Published April 2019
It is the duty of the buyer to gather all necessary information on actual or potential risks involved in a home or property investment. An experienced realtor will assist you through this process, but It is ultimately your responsibility to examine and confirm that everything you have been provided about a listing actually checks-out to be true. Ignorance is no excuse when undiscovered risks becomes a costly nightmare, in what you thought, was the purchase of your dream home. Was the structure built properly and to local building codes, and has it passed its final building inspection? What’s behind the walls or even under the ground that you can’t see? All good questions, and you won’t know, unless you investigate.
Do not make any decisions without confirming the validity of what is written within the listing description and any documents provided to you from the listing realtor. Those records and documents can be outdated and come from many different sources including prior owners & contractors. The way to help mitigate the risks of purchasing a property with problems, starts with collecting and verifying every piece of information you can about your potential purchase, and including contingencies that allow you to further inspect areas that need vetting.
Foremost, when you view the listing with your realtor take a pre-printed checklist that you can complete during your visit, this will help you create your own comprehensive appraisal to establish the listings assets and liabilities. You will then know if there are any areas you want the home inspector to pay special attention to and what contract contingencies need to be written. A buyer can write a contingency into a contract offer that makes the sale depend on the seller disclosing all defects in the deed and property of which he is aware. Where a seller does disclose a defect, the buyer needs to research all of its entanglements.
Be as involved with the inspections and vetting process as you possibly can, and make sure you understand what the findings you are presented with mean. The most common and standard contingency, the boilerplate Inspection, actually refers to four separate inspections, and the buyer usually pays for them. The first is a termite Inspection that includes structures in addition to the house, such as detached garages, barns and workshops. Secondly, a drinking water test to insure the water is tested for heavy metals, chemicals and E. coli bacteria. The third inspection is to confirm if the septic system permit fits current use, and this test should check the age and if the system is functional and up to code. You could be required as new owners, to upgrade to the current septic standard, and code requires special septic systems when the dwelling is near to a lake, river or water source. The fourth, and most telling examination is the house inspection, which must be completed within the contingency time-frame. Hire a licensed and independent party who will document and explain all their findings. This is your one chance to thoroughly examine the entire property with a professional who can tell you if there is something not right.
Other important factors to inquire about include fee ownership and zoning; is the deed ‘fee simple’, which means you are purchasing all the rights the land contains - surface, minerals, water, timber, wind and so on. A buyer needs to know before making an offer whether all rights will be conveyed or if the seller is reserving a right or anything else from the sale. Figure out the market value of the property’s individual assets including; timber, cropland, pasture, improvements, minerals, water rights, farm income, and lease potential. Determine the zoning status of property and the uses that are permitted within that designation. ALR zoning rules have recently changed, always ask if the property is in the ALR and determine if the home or any part of the property is on a floodplain.
Furthermore, acreage figures given, fence lines and other functional boundaries may or may not align with boundaries and numbers in the seller’s deed. Hire a surveyor if you feel there are discrepancies, and your contract offer can request the seller to disclose any known encroachments and boundary disputes. Verify the properties access, if no entrance exists, check with the correct authority to determine whether a new entrance can be put in. If the seller has a deeded right-of-way easement, the buyer needs to make sure that it’s wide enough for his needs, and doesn’t prohibit certain types of uses. The seller may have a recorded easement to use his neighbour’s property, and/or a neighbour may have one to use his. The buyer gets both in a purchase, and easements involve utility lines, underground pipes and roads. As a buyer you should legally draft language into your offer that requires the seller to disclose any unrecorded easement and any claim of use or ownership.
In conclusion, buyers can mitigate the amount of risk they are taking with any estate investment purchase by completing their own due-diligence research. It takes time and organization of facts, documents and inspections, but when it comes to “buyer be ware” - it’s much better to be “buyer is aware” every time.
Due Diligence and the Art of Negotiation, Closing the Deal!
Your real estate listing has received an offer to purchase, and it’s now time to negotiate the sale. Navigating through qualifying the offer and understanding the legalities and contingencies in this process can be daunting. How you handle and respond to the timely offer is crucial to reaching your goal and securing the best possible sales outcome.
The first question to ask should be, is the buyer qualified? You should always get confirmation of the buyers' mortgage pre-approval or other confirmation of legitimacy. Knowing the offer has backing allows you to proceed into the negotiations with more confidence. Once you confirm the offers pre-approval status you are ready to begin the negotiation process.
You now have one of three choices; you can accept the offer exactly as it is, you can reject it, or you can reject it and then counter with an offer of your own. You cannot both accept the offer, and make changes to it. As soon as you make any changes at all to the first offer presented by the buyers, it becomes a brand new counteroffer. When you reject the buyers' offer, they have every right to simply walk away from the potential deal.
Your objective as the seller is to improve the offer, whether that’s a higher price, fewer seller contingencies, or a different closing date.
If you happen to have more than one offer on the table, you can counter with both offers before you decide whether to accept either of them. The highest price might seem to be the best offer. But if it doesn’t include a mortgage pre-approval letter, has an unrealistic closing date, or contains other terms you don’t want to accept, you might choose a lower offer that allows for personal and financial goals to be met.
Create a list showing the key factors of the offer, so you can physically see where it may fall short of your target. Your list should include;
The Deposit: Is it a serious offer with a sufficient deposit? How much is it and who has it? Knowing that the offer comes with a security deposit that is held in trust by an independent party is crucial in determining how serious the buyer is about the purchase.
The Price: What exactly are the buyers offering? Is the amount of money offered reasonable, and is it close enough to the list price to make negotiating worth your while?
The Down payment: Is the down payment a cash offer, and if not, why not? A purchaser must prove that they have the money at hand, RRSP’s or cash holdings to secure the offers obligations.
The Terms: Is the offer from a first time buyer who will have to qualify for a first loan guarantee through CMHC? With today’s new mortgage stress testing it is increasingly difficult for first time buyers to qualify. Knowing this at the start of the negotiation will aid in how you respond.
The Occupancy: What is the purchasers' occupancy timeline for taking possession of the property. A sufficient and reasonable timeline assure that both the buyer and seller have adequate time to prepare for the transition.
The Contingencies: Are there clauses that could weaken the deal?
The buyers offer to purchase may be contingent on first selling their present home. This is a very weak offer, because it means the sale of your house depends on the sale of another house with another set of sellers and buyers. An offer with a clause contingent of financing means the buyers will purchase contingent on their securing new financing which can fail in application. Purchase offers contingent on the buyers' being able to move into the house within a set period of time must be weighed carefully with your own timeline goals. Contingencies directed at disclosure and inspections are a norm in any real estate negotiation and are to be expected. The buyers will purchase only if they approve your disclosures and their professional inspection meets their standards. Usually, buyers will ask for a set period of time to have this completed.
If you receive a contingency offer, thoroughly evaluate it by asking; Is the contingency reasonable? Does the contingency negate the value of the offer and in the end, can I live with the contingency? You can limit the contingency by insisting it is performed within a specified time.
More often than not, a buyers' initial offer will be lower than your list price, but also lower than what they are willing to pay. At this point, most sellers will counteroffer with a price below their list price because they're afraid of losing the potential sale. They want to seem flexible and willing to negotiate to close the deal. This is not always the best way to get the negotiations to end with a top dollar offer.
Get closer to the buyer's offer by countering just slightly below your list price. Someone who really wants to buy will remain engaged and come back to you with a higher offer. If you have priced your property correctly, to begin with, countering at just below your list price says that you know what your property is worth and sets the stage for incremental counter offers closer to your asking price.
Buyers may be off-put by this strategy, and some may see it as your unwillingness to negotiate and walk away. But you will avoid wasting time on buyers who only make lowball offers, and who aren't seriously interested in buying your property. You haven't accepted an offer until both parties sign the exact same sales agreement. Until you sign, you can refuse to accept the offer. However, if the offer is for the price and terms you listed the property for, you could still be liable for a commission to the agent. It's important to understand that the deal isn't made exactly when you sign. It's made when the agent (or you) communicates the fact that you've signed to the buyers. The agent calls the buyers immediately to tell them you've accepted and then takes them a signed (by you) copy of the sales agreement. Technically speaking, the buyers can withdraw the offer anytime before they learn of your acceptance, just as you can withdraw a counteroffer anytime before you learn of the buyers' acceptance of it. The agent must give you a copy of everything you sign. Remember that the deal is not closed until the property title and money have been legally transferred.
In conclusion, the negotiation of any offer to purchase should be handled with extensive due diligence on your part. Asking the right questions and examining the offer with full knowledge of the process is always the best way to proceed. Having an honest and experienced realtor working with you to navigate these negotiations is always recommended in your best interest.
Winter Home Sales strategies to bring in cold hard cash$
Published January 2019
Planning a spring listing for your home or property? If your goal is to sell your home, you may be surprised to learn that there are many positives when potential purchasers are viewing your home during the winter months. The short lull in interested buyers around the December holidays turns into a mid January movement of seriously motivated buyers. You can achieve profitable results and allot of interest in your listing during the winter. Three distinct advantages include:
Furthermore, an overlooked advantage is having a winter ready home. Solid, well insulated construction with proper drainage for water run off both ensure that homes are able to withstand years of harsh elements and frigid temperatures. Show off your easy-to-shovel driveway, fireplace, new roof and furnace, double pane windows, and well-insulated roof and pipes. This is particularly important with older houses as it builds confidence in how your home was constructed, its heating efficiency, and overall potential.
Have a fire going, showcase your hot tub or sauna, highlight the features that will make the buyers life easier to own your home in winter months. Nothing can be as comforting as arriving to a warm home and finding a cozy fire going and the smell of fresh baked bread or cookies in the air. People spend allot of time indoors in winter months and making your home feel like a great space to spend time in can tip the scales in your favour. As always, start with selecting the right realtor who will correctly price your home, help them to create the most detailed online listing. Your realtor should have a strategy for targeted market exposure for your property type. Make sure to emphasize and showcase the “winter ready” elements of your home in your listing and at all viewings. As we come to the end of February, the majority of B.C. will still be under winters white cape for another month or longer. With quick action and a solid plan you can achieve very successful and profitable results by listing now,
2019 Real Estate Projections Affirm Continued Normalization
Published December 2018
As December comes to a close, we can now reflect back on the turbulent year of real estate across the province. The year began with the introduction of the B20 stress testing for mortgage seekers, and then came the Foreign Buyer Speculation Tax, while the Northern Interior and Okanagan regions were paralyzed for several months from forest fires that held up insurance and sales transactions.
Despite these compounding and negative influences there is a positive spin off that has arisen from this currently calming market. The corrective pricing or “normalization” of the market is bringing first time and millennial home
This fall we saw a sharp market correction, and The Fraser Valley Real Estate Board’s web site states that the Greater Vancouver region recorded its lowest number of sales in November 2018 in 10 years, dropping 43% from the year before. Despite the greater Vancouver trend, many houses are still being bought and sold throughout the Fraser Valley region, and benchmark prices are continuing to rise on the outer edges as both Abbotsford and Mission saw slight hikes in their home prices. The current Agassiz MLS stats indicate an average house price of $318,386 and 17 new listings in the last 56 days. Agassiz housing data shows median days on market for a home is 40 days, which is a very reasonable time frame for estate transactions. Aging and retiring homeowners are still looking to capitalize on their estate investments and are then seeking retirement properties, townhouses and other unique property holdings across the province.
This evolving market favours intelligent tactics and realistic expectations of all participants. If you are listing in the new year, your best asset will an aggressive market savvy realtor who knows about the pricing, inventory and detailed market data in your specific community. Your listing needs to stand out from all others to gain attention in a market that has so many choices. Knowing the most recent sales statistics in your area is also very important when deciding what price to list your home at, as those same statistics will be helping purchasers know when a home is overpriced. There will be a less hurried approach from buyers and a more sensible and practical idea of what can be achieved from sellers. As rebounding inventories give purchasers more choices, the market is returning to a more stable and predictable playing field as we forge into 2019.
The Agassiz/Harrison Chamber of Commerce and 3A Group Sutton Showplace Realty would like to wish all readers a peaceful Christmas season and a happy, healthy and successful 2019.
Despite regulatory changes overall market prices in B.C. continue to climb.
Published April 2019 - "The Western Investor"
Spring is slowly melting its way into the northern most parts of British Columbia. Across the province, agricultural landowners are engaged in calving, feeding, cultivating and seeding and commercial tourism operators are readying their establishments for summer guests. BC’s economic climate is adversely echoing springs arrival with the Alberta energy sector in turmoil and we have yet to see the longer term effects that the federal carbon tax increase will have on individual households in B.C.
One segment of those households are hard working rural agricultural and commercial land owners that are aging to retirement, and seeking their exit strategy to do so. Finding the right buyers for their now extremely valuable landholdings has become increasingly challenging, forcing some to continue to operate well past their own retirement timelines.
Statistical data collected in March 2019 is now showing ‘average days on market’ numbers for single detached homes have increased as well. Real estate regions across the province are continuing to report low inventory counts, which in turn is driving up prices. The BC Northern Real Estate Board covers 72% of the province, an area covering over 600,000 square kilometers. Their published March data show sustained market activity with record low inventory and forecasts further price growth in 2019 as a result.
March 2019 statistics published by the Okanagan Mainline Real Estate Board which serves the Okanagan, Shuswap and Revelstoke regions shows that the ‘average days on market’, rose to 92 days, up from February’s 88 days, and last March’s 79 days. OMREB’s President Marv Beer, stated in their March report that, “Usually, when activity increases we see the average days indicator shorten, yet here we’re seeing the opposite.” The report went on to confirm that despite an almost 45% increase in new listings in the Okanagn region that the home inventory count decreased by 12% over last month.1.
We are seeing this variance in the market because both domestic and foreign buyers are facing stricter regulatory hurdles to borrowing and ownership. The telling effects of the B20 Mortgage Stress Testing that qualifies buyers, has taken many would be purchasers out of the realm of ownership all together. Even long time property owners don’t have the upgrade options they once would have had, even with a substantial income and existing home equity. This has created an even larger gap in the affordability of ownership across the province. In order for the real estate market to maintain a healthy count of correctly priced inventory, it must have enough qualified buyers for those listings. Where will these buyers come from?
Compounding the issue, is the Foreign Buyers Speculation Tax, meant to correct the lower mainland and Okanagan’s affordability issues. Since implementation it has slightly reduced housing prices, spurring some new activity in the Fraser Valley and Chilliwack Regions in March. But the Speculation Tax has had a pronounced contrary effect on foreign real estate investment in the rest of the province. In allot of circumstances, foreign buyers are the only buyers interested, willing, and financially capable of purchasing and running commercial tourism and large agricultural operations. Immigrant Canadian and land investors from the USA and Europe bring a much needed influx of capital to the BC Economy. There is allot of money leaving European countries right now seeking a safe haven, but Europeans are are taking their capital elsewhere as the B.C. NDP’s shortsighted policies have soured the investment climate, putting B.C. at the bottom of the list. There are still a handful of brave, nature loving European investors who are seeking B.C. properties, and this trend will continue with the looming European elections, but without serious interest from foreign investors, many commercial owners, ranchers and farmers will be listing their nest egg investment into a severely reduced pool of qualified buyers.
The BC Real Estate Board is forecasting a reduction in mortgage interest rates for 2019, which would help to qualify more domestic buyers, although a total correction of the imbalanced market lies with well thought out changes that are needed within government policy. The shortsighted speculation tax on foreign ownership aimed at reducing the housing costs in the lower mainland has not taken into consideration the effect it would have on the other 90% of the province. Patience and an experienced realtor will continues to be a sellers best assets, and buyers will need to leverage their best financial overview to reach their estate goals as we head into uncharted market territory in May.