Photo courtesy of REW.
What is the market value of your home?
Market value is what a buyer is willing to pay for your property in the current market. It represents the most probable price your home will fetch. This is not necessarily the highest, lowest or average price. Market value is an estimate based on broader data from comparable properties at a specific point in time.
Estimate your market value by checking your municipal assessment.
The municipality provides an annual assessment for property tax purposes. You can look up your address on most municipal or county websites. It provides baseline data but relies only on typical characteristics and lot size. It often misses recent interior renovations (such as a new kitchen). As we’ll discuss later, it’s not the same thing as market value.
Compare recent local sales to estimate your market value.
True market value is driven by local demand. Look for homes within a few blocks of yours that sold in the last three to six months with a similar square footage layout and bed/bath count.
Use automated valuation models (AVMs) to determine market value.
Online estimators are perfect for a quick benchmark. Financial institutions like RBC offer free digital tools to get an instant automated estimate.
Request a comparative market analysis (CMA) of your home.
If you are planning to sell, then consult a local real estate agent. They can provide a free CMA that evaluates active listings, recent sales and current market trends. These help set a realistic listing price.
When should you hire a professional appraiser?
If you are buying, refinancing or facing legal proceedings, a formal appraisal is usually required by mortgage lenders to protect their fiscal interests. For a highly accurate, legally binding valuation, hire a fee-based certified appraiser. They will conduct a physical inspection of your home and analyze a deep mix of variables, including neighbourhood quality, lot characteristics, home size, layout, upgrades, maintenance, parking and strata factors.
Photo courtesy of REW.
What’s the difference between market value and property assessment value?
One of the most common misconceptions among homeowners is that their property's assessed value and market value are the same thing. While the two figures are related, they serve quite different purposes and are often calculated using different methods. See our articles on BC Assessment and Alberta Assessment for more information on how these two property values differ yet remain related.
What main factors determine a home’s market value?
Several variables determine why one home sells for significantly more than another, even within the same neighbourhood. When it comes to calculating your home’s market value, there are quite a few more factors in the process. Your house’s market value is whatever a buyer is willing to pay for it, but many factors determine that price.
The market value of an Alberta home, for example, is heavily influenced by its geographic location, the desirability of the neighbourhood and the size of the lot. Physical attributes such as building style, age, square footage and the number of bathrooms play a primary role, as do specific add-ons like garages, decks or finished basements. External factors also matter. For instance, a mountain view or proximity to transit can increase value, while environmental issues such as high traffic noise or odours can decrease it.
In selling, information is key. It enables you to make the best decisions using the most recent property data, market trends and insights from your neighbourhood.
Photo courtesy of REW.
The market sets the value of your property. Market value assessments depend on variables such as:
- Market conditions: Recent sales prices of comparable nearby properties.
- Location: Neighbourhood desirability, amenities and transit access.
- Surroundings: Views, traffic noise, odours and environmental factors.
- Property size: Total land area, lot dimensions and layout.
- Site improvements: Utilities, drainage, servicing and land enhancements.
- Exterior features: Garages, carports, decks, landscaping and outbuildings.
- Building size: Total living space, finished area and number of stories.
- Age and style: Year built, architectural design, construction type and historical value.
- Physical condition: Overall upkeep and needed repairs as of the assessment date.
- Interior layout: Number and size of bedrooms and bathrooms.
- Basement: Finished vs. unfinished.
- Quality of finish: Material quality, craftsmanship and interior upgrades.
- Rural factors: Agricultural land use, rural services and regional market trends.
How often does market value change?
Photo courtesy of REW.
A home's market value is constantly changing, even if nothing about the property itself has changed. Seasonal fluctuations often influence pricing, with spring and early summer typically bringing more buyers and increased competition, while activity may slow during the winter months. Broader economic conditions, including employment levels, population growth, consumer confidence and inflation, can further impact housing values.
Because these factors are constantly evolving, a home's market value should be viewed as a moving target rather than a fixed number.
What does market value mean to a homeowner?
Your home's market value is determined by what a qualified buyer is willing to pay for it in current market conditions. The most accurate estimate comes from reviewing recent comparable sales, current market trends and, when necessary, obtaining a professional appraisal or comparative market analysis.
