Understanding Why Market Value Changes
From early 2016 and now into Fall of 2017, we’ve seen a lot of changes in the Real Estate Market. As a Real Estate Agent in Guelph and the surrounding areas, I’ve seen prices of homes change as well as buying and selling habits of homeowners and potential homebuyers. With changes in behaviour for the Real Estate Market in Guelph and elsewhere, many are curious as to why the Market Value of a home fluctuates. Understanding why Market Value (MV) changes can help you better navigate choices you make regarding your home.
What is Market Value?
If you’re stepping into the Real Estate Market, you need to understand what Market Value represents before you go much further. In the simplest terms, Market Value is the worth of a home on the Real Estate Market.
But it gets a little more complicated.
Market Value is dependent on a quite a few factors—most important being the buyer, followed by the seller. Market Value is the price put on a house to sell within a reasonable amount of time, which is finalized by the agreement between the seller and the buyer on the property’s worth when it is purchased.
In an ideal Market for both the buyer and seller, the buyer’s amount they want to spend on a property matches the price the seller has put on their home.
But as we’ve seen in the Real Estate Market this past year, this isn’t always the case. Market Value is influenced by external factors beyond what the buyer and seller set as their pricing goals, including what a home looks like on the outside, the characteristics of a home inside, and most importantly, the amount of homes on the market and their location.
When Market Value Exceeds the Normal Market Value
If you recall, in 2016 Real Estate Market there were properties selling left, right and centre because there were so few homes available in the GTA and even in the Guelph Real Estate Market.
Why? Because of the demand for homes exceeded their availability, and their locations were ideal.
Virtually any home that was put on the Market in Southwestern Ontario was part of a bidding war, making the Market Value of a home change from its usual Market Value, to an increased Market Value. Desperate buyers were bidding far over the listing price of properties and what they would regularly consider a fair amount to ensure they outbid others.
But as more homes started hitting the market in 2017, the demand of homes dropped.
With more to choose from and listing prices becoming more reasonable, bidding wars weren’t as necessary as before. That’s because the Market Value became more comparable to other homes also selling for a similar price in the area.
Guidelines to Determine Market Value
As a general guideline, it’s a good idea for buyers and sellers to take a look at properties that have recently sold in their location of interest and of a similar property type. This gives an idea of what Market Value should be. The exception to this guideline is when the demand for homes exceeds the amount of homes on a market, but it should typically be the basis for buying and selling.
To get the most accurate idea of what Market Value is, it’s a good idea to contact an experienced Real Estate Agent in your area because they will know more about property sales and neighbourhoods. Once you’re ready to move forward with the purchase or a sale of a home, getting a Market Value Assessment (MVA) is important.
In addition to my Real Estate license, I also have a Market Value Appraiser designation to help buyers and sellers determine a true Market Value for a home. I take the time to research other comparable properties in neighbourhoods of interest to help clients price their home, or sell their home at Market Value.
Has Guelph Real Estate Market Value Changed?
In 2016, Market Value of homes in the Guelph Real Estate Market looked different than the Market Value of homes in the 2017 Guelph Real Estate Market. This year, we’ve seen more homes on the Real Estate Market, however, the amount is agreeable to the number of buyers. The scales of supply and demand have become more level. This has put a cap on most bidding wars as buyers are seeing Market Value for similar homes that have sold in their preferred location, and bidding much more reasonably.
Is this a bad thing?
That depends on how you look at it. Home sellers should be pricing similarly to other sellers in the area, and won’t be profiting as much as they would have in 2016. But at the same time, they are receiving the current Market Value, which is fair.
Homebuyers are not entering bidding wars because Market Value and the availability of homes is allowing them to look at a few house options before they make offers. The result: A Real Estate Market that’s more even for buyers and sellers.
Don’t Confuse Market Value with an Assessed Value
The other thing to keep in mind is that Market Value of a property may not be the Assessed Value of a property. The Assessed Value is different from what a seller is willing to sell for and what a buyer is willing to buy for because it is based on property tax and value for that land in the city. Assessed Value can be much lower than Market Value because there are less external factors that make the Assessed Value change. Assessed Value can be found through public records and can be useful for both the buyer and seller to justify what they will be spending or receiving.
Get a Market Value Appraisal
If you need a Market Value Appraisal for your home in Guelph, please contact me, Deb Olender to help you. With my experience as a Market Value Appraiser in the Guelph Real Estate Market, and as a Real Estate Agent in Guelph, Kitchener, Waterloo and Cambridge, you can expect me to guide you through buying or selling. I closely monitor home sales and listing prices in a variety of neighbourhoods to give buyers and sellers the most accurate Market Value. I can talk you through the changes in Market Value in recent months and provide you the knowledge you need to feel comfortable with your home.
Please contact me through email or by phone to set up an appointment to any Market Value needs in Guelph or the Tri-cities.