According to Statistics Canada, in 2016 about 63% of Canadians held mortgages on their own homes, with 43% of those having managed to pay off their mortgages in entirety. Without an aging population who have had several years to rid themselves of their house debt, Statistics Canada estimates that number would have decreased to about 36%. It still means, however, that the majority of us are diligently making monthly payments in the hopes of building a decent amount of equity in our home, and also to eventually own it outright. But considering that the median amount or mortgage debt for Canadian families is $180,000 (an amount that alarmingly doubled 1999 to 2016), a lot of us have many, many months and years to go before we will finally be outright home owners.
Buying a home is likely the largest investment most of us make in our lives, and it’s nice to know that we’ve made a good one. With the volatility of the market as of late, it can be hard to tell what our homes may be actually worth, and the documents we receive from the City of Calgary each year often don’t help much in clarifying. Knowledge (and documentation) of your property value assists in planning for retirement, and can also be very useful should you have to file a home insurance claim.
Property Taxes versus Property Value
A recent CBC article written by Robert Price, CEO of Bōde Canada (a company that allows people to buy and sell homes without a realtor), attempts to clarify the difference between your property value assessment and your property tax assessment. Receiving your annual property value assessment from the City of Calgary in January may seem like a good indication of what to expect come property tax time at the beginning of June, but these calculations are both based on complicated formulas as well as the ability for municipalities to provide services to its citizens.
For your municipal property assessment, city officials look at several main factors:
- Location, including the community you live in
- Type of home (detached, attached, condo, etc.)
- Property style (two-storey, split level, bungalow, etc.)
- Size of the lot
- Square footage of the home
- Proximity to green spaces
- Specific characteristics of the property
A complete list and more detailed analysis of all the factors the City uses to determine the value of your property can be found here.
On average, according to Price, property value as assessed by the City went down about 5% this year, although some saw up to a 10% drop. The actual real estate market is also down. On May 1, CTV News reported the average price of a detached home in Calgary had fallen to $432,655 in April, down from $460,953 a year ago.
With all of that, it would be reasonable to expect that property taxes would go down as well. But, this year nearly everyone saw an average rise of 9% in their taxes. To calculate your property taxes, the City adds your property assessment multiplied by the municipal tax rate together with your property assessment multiplied by the provincial tax rate. The reason for the 9% increase is a combination of an 11.3% increase in the provincial education property tax as well as an already-approved 7.5% municipal tax hike. This translates into about $280 more a year for those who own a home of median value in Calgary, of which about $130 will go to the provincial government.
Should I Get a Home Appraisal?
Even with all of these numbers and formulas, it’s still not easy to know what your property value actually is. As the City of Calgary’s numbers are based on data sometimes up to a year old, many don’t believe they provide an accurate perspective. In addition, it’s often said that things are worth what people will pay for them, and that’s often quite apparent in the real estate market. Very similar homes can often sell for tens of thousands – even hundreds of thousands – of difference in dollars, as people tend to make choices based on emotions as well as practicality. So, if you are in search of your true property value, there are a couple other avenues you can try.
A home appraisal helps determine property value in a number of ways. They are meant to provide an unbiased, professional opinion, and generally cost several hundred of dollars. If you require your home appraisal to hold up in court, such as for a divorce settlement, loan, or an insurance claim, ensure you only work with a Licensed Property Appraiser.
When an appraiser’s job is finished, you should be provided a thorough report including such information as:
- Maps of comparable sales
- Any potential issues with your property
- An evaluation of the integrity of your roof and building structure
- Access to amenities
- Location assets
You can also do some of the homework yourself and check what realtors call “comps” in the area, which are homes of comparable size, configuration, and fixtures in the area. You can do this for free on a site like Realtor.ca. As every home is unique, however, and personal taste plays a very big part in most real estate decisions, even comparing and contrasting comps will probably only give you a ballpark number for your property value.
Keep Your Insurance Company up to Date
As you go through the process of assessing your home’s value, remember that it is essential to keep your insurance company up to date on anything happening with your property. Your property appraisal could become a part of your annual review of your house, land, outbuildings and belongings to guarantee your coverage accurately reflects your situation.
At Lane’s, you will be partnered with a specialist who will be your personal contact for all things insurance. Even though we may not be your provider, we are always your source for good information, and no obligation quotes.