Edmonton’s tax assessed value vs. market value.
It’s that time of year again, tax assessment time. If you own a home, by now you should have received a notice from the city that gives your property an assessed value. I am here to tell you that this number is quite often way off from the current market value of your home. And when I say market value I am referring to: the value that your home could sell for on the open market. The city uses a mass appraisal system to decide what your property is “worth” - and their purpose is for property taxes.
This mass appraisal system does look at some of the information that is used to determine market value. Things like location, garage, size, etc. are considered when the city determines value, but there are a lot of very important aspects that they don’t consider.
Other aspects of the home like finishes, condition, and various other upgrades that the city may not know about aren’t being considered. Think about it, the city doesn’t know if your basement still has shag carpet or if it has been modernized with vinyl plank flooring. Are all of your appliances from 1952, or are your appliances so new that you have a fridge that can talk to you and pour you a margarita? One house on the street could have great curb appeal and be very well maintained, while the neighbouring house could be dirty, decrepit, and have 10 cars in the backyard that haven't moved in years. All of these things absolutely matter when considering market value.
Furthermore, and this is a big one, the current state of the real estate market needs to be considered! Things like interest rates, inventory, recent sales, and other pertinent data are extremely important to consider. For example, if you’re trying to sell a condo and there are 12 similar units for sale in the building, you may not get top dollar if your competition starts a race to the bottom with pricing. Inventory matters. Or let's say you have a higher end home listed for sale and interest rates keep rising, lots of potential buyers are likely unable to afford a higher end home as their buying power has been reduced by rising rates. Interest rates matter.
My point is that there are a lot of details and considerations when determining market value that just aren’t accounted for in the city assessment. If you receive your assessment and are concerned that it does not accurately reflect your value, it most likely doesn’t. So if you just bought a house for $400,000 last year and your assessment says $350,000 this year, don’t panic. I regularly see city assessments way off in both directions. If you’re curious what your current market value looks like, feel free to reach out and I would be happy to dig into the info and give you a more accurate value.