Home prices have skyrocketed but assessment values remain stuck in 2016 in Ontario
Published April 17, 2024 at 1:29 pm
The spring real estate market is heating up in Ontario and many people may be thinking about home values.
After a lull in the market the last year, real estate experts are predicting an upswing.
A report from real estate brokerage Royal LePage, predicts aggregate home prices in both the greater Toronto and Montreal areas are expected to increase significantly, with the GTA slated to see the most dramatic rise of any region in Canada.
Home prices are determined by the market but just how individual homes are valued for tax purposes involves a few factors. In Ontario, the Municipal Property Assessment Corporation (MPAC) administers property assessments and determines the assessed value for all properties.
The assessment is based on several factors including local real estate transactions and sales of similar properties, said Carmelo Lipsi, vice-president, valuation and customer relations and chief operating officer for MPAC.
However, the last property assessment from MPAC is from 2016, and the dollar value listed is likely well below the current market. The property value figure is used in municipal government property tax calculations.
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The last time the provincial government gave MPAC direction to conduct a province-wide assessment update was for 2016. Typically, assessments have been done once every four years but they were halted in 2020 due to the pandemic, Lipsi told insauga.com.
Last summer, the provincial government announced they would delay an assessment update again in 2024.
The Association of Municipalities of Ontario (AMO) has asked for a timely return to the assessment cycle.
“AMO is concerned that further delays will compound uncertainty for residents and businesses,” AMO wrote on their website. “Outdated assessments are inaccurate, increase volatility, and are not transparent.”
Some homeowners may be concerned that once the property assessments are done, taxes will increase. But Lipsi said that won’t likely be the case.
The municipality requires a certain amount of revenue to provide services for the community. So, if the value of a home increases, that doesn’t mean taxes will go up — the municipality still requires the same amount of revenue.
“If that number (municipal revenue) doesn’t change, or stays relatively the same, the overall changes in assessed value will have very little impact on the additional taxes that a homeowner can expect to to pay,” Lipsi said.
“So if your (MPAC assessment) increase is similar to what the average increases are for other residential homes in your municipality, there will be no increase in taxation as a result of an assessment update.”
Whenever the assessments do return, most homeowners will likely see a very different number for their property value. In just 10 years, average home selling prices have increased by more than $500,000 in places such as Oshawa.
MPAC looks at about 200 data elements when coming up with the assessed value of a home, Lipsi said.
These elements come down to five key factors which are location, lot size, total square footage of the home, the building age, and the construction quality.
“So those typically make up about 85 per cent of the value of most homes,” Lipsi said. “…location is obviously one of the one of the biggest drivers of value of a property in the real estate market.”
So a home in northern Ontario, for example, may have been built in the same year and be basically the same size and age as other homes in southern Ontario but the value is much lower than a home in the GTA.
MPAC valuation experts monitor the real estate transactions to keep up with current property values.
Other factors include renovations, additions and upgrades to the home.
“Construction activity, additions, renovations, you may have added a garage or swimming pool, you know, quite a bit of that activity was happening during the pandemic, with the restrictions around travel,” Lipsi noted.
City permits for that work will trigger MPAC to send a property inspector to keep information on all properties current.
MPAC maintains a database of 5.6 million properties across Ontario and homeowners can access information on their own home through the AboutMyProperty portal on the MPAC website. They can see the age and size of the home, and any information on renovations or additions.
Homeowners can also look at homes in their immediate area to compare the assessed value of their property with others in the community.
For more information, see the MPAC website here.
Lead photo: Kelly
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