Real Estate Talk: Market price vs. city evaluation
THE MUNICIPAL EVALUATION CAN NOT BE USED TO GAUGE THE MARKET PRICE OF A HOME
By Joseph Marovitch
October 31, 2024
A frequent question these days is, “How is the market?” A common situation is homeowners, not understanding the current market and how it is affected by world events, pricing their property higher than the market with the argument “My municipal evaluation is x amount, therefore my property should sell higher.” Pricing and evaluations have changed since the pandemic.
During the pandemic, there were few properties for sale due to potential sellers not wanting to receive clients who might have been infected with COVID. However, there were many buyers for each property because people had to live somewhere. Therefore, there was an average of 15 or more buyers for each home. This high demand and low supply caused homes to sell up to 45% higher than they would have sold pre-pandemic.
Between January 1, 2024, and October 31, 2024, there were 106 single homes sold in Westmount. Of the 106 homes sold, 40 homes or 37.7% sold below their city evaluation.
Since the roll or evaluation for property tax takes place every three years, after the pandemic, the city took the average home prices during the pandemic and applied those increases to the current market. Since the demand is much lower now, the city evaluation does not reflect the current demand or value, which is lower.
Between January 1, 2024, and October 31, 2024, there were 106 single homes sold in Westmount. Of the 106 homes sold, 40 homes or 37.7% sold below their city evaluation.
The municipal evaluation is based on average sold prices in the area and what the homeowner owes for maintenance and repair of city streets and other utilities, recreational facilities, schools and more. The amount payable is both the needs of the city and the square footage of the property in question. What the evaluation can indicate is whether one property is worth more or less than another. The municipal evaluation cannot be used to gauge the market price of a home.
To assess a property’s value, it’s essential to consider the sale prices of comparable properties in the area, as well as current listings. The sales data from the past twelve months is a reliable indicator of what the property is likely to sell for. What is actively for sale is the competition for the sale of the property in question.
One issue to be aware of is city evaluation and asking price. If your asking price is comparable to other nearby properties but the city evaluation is lower, then your property is assisting in selling other properties.
Brokers who find two properties asking the same price with one having a lower evaluation, will bring their client to that property first and then take their client to the other same-priced property with the higher evaluation.. The broker will then explain to their client they can have the same priced property and get more for their money, and sell the other property.
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To assess a property’s value, it’s essential to consider the sale prices of comparable properties in the area, as well as current listings. The sales data from the past twelve months is a reliable indicator of what the property is likely to sell for.
Therefore, price the property for sale based on comparable priced property and not based on city evaluations, if you do not want to be used to sell other homes. Price slightly lower than the competition so the competition works for the seller instead. Brokers will then bring clients to higher priced, lower evaluated property first and then to the better deal, your property, and sell it.
Should you have questions or comments, please refer to the comments section at the bottom of the page. As well, to view past articles, click here.
STATE OF THE MARKET
Despite the recent interest rate cuts by the Bank of Canada, the market has not moved very much. Many sellers are waiting for interest rates to drop further. There has not been a marked increase in demand either. Many buyers and sellers are on the sidelines waiting for some indication the economy will remain stable. There are many factors with moving pieces right now. The U.S. presidential election, along with an escalating war in Gaza and North Korean soldiers sent to Russia to assist in the unprovoked Russian war on Ukraine, all affect the worldwide supply chain and in turn, our inflation and interest rates.
Despite the recent interest rate cuts by the Bank of Canada, the market has not moved very much… Many buyers and sellers are on the sidelines waiting for some indication the economy will remain stable.
The next few days will indicate the direction we will go in. The next few months will indicate if the direction is positive, stable, and long-term.
Have a great week!
Image: Mohamed Hassan – Pixabay
Joseph Marovitch has worked in the service industry for over 30 years. His first career was working with families from Westmount and surrounding areas, hosting children between the ages of 6 to 16 as the owner and director of Camp Maromac, a sports and arts sleep-away summer camp established in 1968. Joseph applies the same strengths of caring for the families, such as reliability, integrity, honesty, and a deep sense of protecting the interests of those he is responsible for, to his present real estate broker career. Should you have questions please feel free to contact Joseph Marovitch at 514 825-8771, or josephmarovitch@gmail.com