Higher MPAC assessments a mixed bag

The latest Municipal Property Assessment Corporation review of property values contains some good news, and some that should give us pause.

Before discussing the good and bad, it’s worth noting what MPAC assessment is and is not. It is not a forecast of the resale value of your property. It does not necessarily mean your taxes are going up, although they could if the assessed value of your property has increased significantly.

MPAC is an independent, not-for-profit corporation that is paid for by all Ontario municipalities. They fund MPAC for what it provides: Regularly updated and consistent property value assessments that municipalities can then use as a basis for property taxes. This model brings a degree of standardization and best practices to the provincial assessment process. It is not perfect, but it’s better than a balkanized approach.

The good side? The fact that the latest review confirms what all of us should know by now — that housing values in the Hamilton-Burlington area have increased in fairly dramatic fashion. If you’re a homeowner and you want to see the value of your biggest investment (as homes are for most of us) growing, this should offer some comfort, even though it’s not the same as resale value, which is determined almost entirely by marketplace conditions.

But yes, there are downsides to increasing MPAC assessments. To the extent that they are at least directionally linked to housing affordability, the new assessments paint a picture of a market that is becoming increasingly unaffordable for first-time buyers. That should worry us because without growth in that segment of the market, quality of life questions emerge as well as ones about growth and sustainability of the local tax base.

There are other things to worry about. Higher assessed values will lead in many cases to higher taxes. This isn’t brought on by anything local governments do. It’s simply because the assessment of property values is increasing. More property value often equals more taxes. That is understandable, to a point.

But it’s also true that certain segments of our homeowner population are already stretched thin and may not be able to afford the higher taxes that go along with higher assessment. For those taxpayers, the City of Hamilton has some programs aimed at helping low income seniors and individuals and families who are facing extreme poverty. But they are limited. The city may need to review its safety net to ensure people on the margins are not pushed off the edge by increasing property values and taxes.

The challenge here is to realize optimum benefit, for individuals and the community, of higher housing values, while finding ways to mitigate the negative aspects. As is so often the case, that is no simple matter.