Real Estate

The nuisance hypothesis and B.C. Assessment's $5.7-million reduction in the value of Chip Wilson's waterfront mansion

by Charlie Smith on January 2nd, 2019 at 8:28 AM
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      The founder of lululemon athletica still owns the most valuable residential property in the province.

      But the downturn in the Vancouver luxury-home market has diminished its value.

      In its latest analysis, B.C. Assessment has valued Chip Wilson's Point Grey Road mansion at $73.1 million. That's down from $78.8 million last year.

      Last month, B.C. Assessment said that homeowners can expect decreases in assessed values of five to 10 percent for single-family homes in Vancouver.

      The Wilson home's assessment was down 7.2 percent, which is close to the middle of that range.

      Wilson's house is on the waterfront and he named his commercial real-estate company Low Tide Properties.

      According to Forbes, Wilson's net worth is US$3.5 billion, so he can absorb a $5.7-million drop in the assessment on his primary residence.

      Sandbags near the waters off Spanish Banks hold back the tides from washing over Northwest Marine Drive in Vancouver.
      Charlie Smith

      Rising seas diminish home values

      Coincidentally, the fall in the value of Wilson's home occurred during same year that a study was released showing the effects of climate change on low-lying real-estate values in Miami–Dade County.

      The coauthors, including Harvard Graduate School of Design professor Jesse M. Keenan, used the term climate gentrification to describe the disproportionate increase in the value of higher-elevation properties in Miami.

      The Florida city is expected to be hit hard by rising sea levels resulting from the melting of Arctic and Antarctic ice and the Greenland ice sheet.

      These events are being driven by rising levels of greenhouse-gas emissions. In November, they exceeded 408 parts per million of carbon dioxide in the atmosphere, as recorded at the Mauna Loa Observatory in Hawaii.

      The housing researchers also employed the term nuisance hypothesis to explain why rates of price appreciation of the lowest-elevation cohort in MIami–Dade County did not keep pace with price appreciations at higher elevations since 2000.

      "The logic behind the formulation of the Nuisance Hypothesis was based on the proposition that increased nuisance flooding may have been negatively impacting low elevation properties in the market," the authors wrote. "Interviews with real estate brokers suggested a certain intelligence about high nuisance portions of MDC [Miami–Dade County] among the brokers.

      "While the findings support the hypothesis, they do not necessarily speak to a validation of the causal logic," they continued. "However, in some areas, lower elevation properties are grossly underperforming relative to other elevation cohorts." 

      According to their analysis of a data set of 800,000 properties, this trend appears to have accelerated since 2000.

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