Determining the value of a home is no simple matter. No two homes are exactly the same. There are many factors that can influence what your property is worth. The real estate market can shift quickly and the demand from buyers can have a big influence on the value of your home. Let's review what drives value and some of the ways to estimate of your home's value.
The 5 Home Value Drivers
In Ontario, you pay property taxes to your local government. The value of your home determines the amount you pay. Ontario relies on the Municipal Property Assessment Corporation (MPAC) to assess every home. According to MPAC, there are 5 main drivers of value that determine 80% of the value of a home. These five factors are:
Location: The local neighbourhood is a big factor that drives value. Being close to amenities, schools and workplaces improve value.
Lot Dimensions: The larger the lot, the higher the assessed value.
Square Footage: More finishes space improves value.
Quality of Construction: Cheap or damaged finishes lower the value of a home. High quality finishes drive value up.
Age or Adjusted Age: The older the property, the lower the value. The value can also increase after completing renovations.
Aside from the Big 5, MPAC also assesses other factors related to:
Primary Structure: finished basement, porch, deck etc.
Secondary Structures: garages, in-ground pool, outdoor fireplace, etc.
Site Influences: ravine lot, proximity to a golf course or local schools, etc.
NOTE: This assessment is not the same as your home's current market value. Generally, the MPAC assessment is lower than the current market value.
Online Tools
Online calculators are available to give an estimate of the value of a property. These calculators use formulas to give an estimated value based on recent sales in the same area. These tools can be helpful in the early stages to give you a rough estimate of your home's worth. Keep in mind that these tools have limits and do not produce an accurate home evaluation.
Comparative Market Analysis
Realtors use a Comparative Market Analysis (CMA) to determine a home’s value. A CMA involves a detailed review of the the recent sales that are similar enough to compare to your home. With enough data, you can arrive at a trend for what your property is worth.
How's the Market?
Interest rates and buyer confidence in the real estate market affect prices. Mortgage interest rates have increased a lot in the past year. This has limited demand by lowering what buyers can afford. The economy has taken a hit leading to lower buyer confidence in the housing market. It is currently a buyer's market. With more listings on the market, expect to take longer to sell your home.
Review
Determine the value of a home is a fluid process. Home prices change with economic and local market factors. A range based on the recent comparable sales will give you a good idea of what you can expect to receive. We currently offer free, no obligation home market report to anyone living in Ontario. Send your name and address by email or text and we will send your market report within 1 business day.
email: info@russorealtors.ca
Call or Text: (519) 280-0100
Thinking of listing your home? Check out Our Guide to Listing Homes in the link below! Included in the Guide is everything you need to know to list your home:
How We Decide When to Sell
How We Determine a List Price
How We Prep a Home to List
How We Market a Home
How We Handle Showings
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