The term ‘property value’ can mean different things at different stages of homeownership. For example, homeowners who are looking to sell are eager to learn their property’s value and find out how much they can get for it in today’s market. On the other hand, homeowners who are well settled with no intention of moving will still feel the impact of their home’s property value in the form of taxes.
In our four decades of transacting real estate in Toronto, we’ve picked up a few helpful insights for helping our clients with all facets of real estate – even long after the deal is closed. Property values are a complex subject with constantly changing variables and diverse applications. That said, there are some broad strokes concepts that buyers, sellers, or homeowners can easily grasp to better support their real estate goals.
Here’s our beginner’s guide to property values in Toronto.
Want to talk to a real estate expert about what your home is worth? We’ve got real answers. Call us.
Looking for ways to increase your home’s value before you sell? Check out these blog posts.
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Property Value & Taxation
Owning property in Toronto means paying tax on it. This includes primary residences and investment or recreation properties. In Ontario, the determined value of a property is a key metric in calculating the taxation applied to it. With that in mind – let’s take a look at how property values are analyzed for taxation purposes.
While homeowners are taxed annually, the rate-determining property valuation process occurs every just four years. At the beginning of each four-year cycle, homeowners receive a current value assessment (CVA). The results of the CVA offer the homeowner and the city a rough value of the property – this value then informs the rate of taxation on the property for the next four years.
CVAs are performed by the Municipal Property Assessment Corporation (MPAC), which assesses and classifies all properties in Ontario.
Note: If the MPAC determines that the value of a property has increased, it doesn’t always mean that the homeowner will pay more taxes. Click here to learn more about property tax calculations.
The MPAC has 5 main criteria for determining the value of a residential property.
- Location
- Lot Dimensions
- Age of Building
- Exterior Square Footage
- Quality of Construction
Market Valuations
Determining property values is also a critical part of selling or buying a home. A professional market valuation, often performed by the selling real estate agent, will consider many of the same aspects included in a community value assessment, with some important additional considerations related to the market.
Property Factors
When performing a property valuation a real estate agent will first complete an in-depth tour of the home and take stock of its physical features, dimensions, and layout. Buyers can make the most out of a professional valuation by having key information such as square footage, and any documents outlining upgrades, repairs, or renovations ready on hand.
Physical property factors play a major role in this process, however, not all of them will have the same impact. For instance, in Toronto, outdoor pools rarely have a significant influence on the value of a home.
During this stage, a real estate agent can also offer unique strategies for adding value. Small improvement projects, furniture or decor upgrades, and staging are common techniques for increasing the value of a property before it enters the market.
External Factors
Many homeowners can underestimate the influence of external factors on their property value. In reality, external social and economic elements can have just as much impact on value as a property’s built-in features.
One of the most considered factors in a professional property valuation will be comparables. In sum, comparables are recently sold or currently listed homes that share commonalities with the property being evaluated. Elements such as size, location, condition and features are all accounted for. Agents know that buyers are constantly shopping around. Therefore, the price of similar properties will play a role in determining the true value of the home being evaluated.
Next is market dynamics. Similar to comparables, the ongoing activity in any given market will directly influence the cost of properties within it. Markets fluctuate all the time, which means home prices can too – even if the physical homes don’t change at all. If a high volume of buyers enters a market within a short timeframe, property values will typically increase.
In Toronto, nearly every facet of real estate is influenced by broader social and economic factors. To learn more about how market trends could impact you, check out these blog posts.
- How Will The Shifting Toronto Market Impact Homebuyers
- Everything You Need to Know About The Recent Interest Rate Hikes in Canada
- A Seller’s Guide to Bully Offers
Pricing Strategically
When selling a property, determining its value and choosing a listing price are two different processes. Sellers always want to get the highest possible price for their home, but in a dynamic and ever-changing market like Toronto, the process isn’t exactly black and white. A home may have a correct market value, however, listing it at the exact number could cause buyers to turn the other way.
How We Price Homes
Pricing is an art. At Christensen Real Estate Group, there’s no guesswork involved in our in-depth pricing process. We strategically price properties based on careful assessment, community market analysis, and up-to-the-minute buyer trends. The result is a compelling, market-optimized listing price that attracts qualified buyers and high-quality offers.
Thinking of selling your Toronto property? We can help you maximize your sale. Book a seller’s appointment.
