Property Assessment VS Current Market Value – What’s the Difference?

It is now January and homeowners have all gotten their 2025 property assessments, and many were surprised by how much the city valued their properties. It can be confusing to understand the difference between “assessed value” and “market value” when buying or selling a home. The assessed value is usually much lower than the market value, which buyers like because it means lower taxes, while sellers want to sell based on the higher market value. This difference shows why assessed values aren’t always the best way to figure out a property’s true worth.

A property assessment is an official estimate of a property’s value, usually done by a local government to determine its market worth. It’s mainly used to calculate property taxes, ensure fair taxation, and give a sense of property values in the area. In Calgary, property assessments are conducted annually in July by the City of Calgary, with notices sent to property owners at the beginning of the year.

• Purpose: The primary goal is to establish a value for tax purposes, but it can also help in real estate decisions, financial planning, or resolving disputes over property value.
• Assessed Value: The value determined by the assessor, often adjusted to reflect guidelines or percentages set by the jurisdiction by assessing the value with an inspection
• Appeals: Property owners have until March 21st, 2025 to appeal an assessment if they believe it inaccurately reflects their property’s value.
• Impact on Taxes: The assessed value is multiplied by the local tax rate (mill rate) to calculate property taxes. An increase in assessed value typically leads to higher property taxes unless offset by a lower tax rate.

In 2024, many Calgary homeowners saw big jumps in their property assessments, thanks to a hot real estate market. This was mostly driven by more people moving to the city, drawn by its affordable living and job opportunities, which ramped up housing demand. Property values also went up, with single-family homes rising 14% and condos jumping 22%. On top of that, the demand for detached homes in the suburbs and new buyers entering the market pushed values even higher. All these factors led to higher property assessments for a lot of homeowners.

Current Market value, as determined by realtors, is basically the price a property is likely to sell for in today’s market. It’s what a buyer is willing to pay and a seller is willing to accept in a fair and open deal. If you haven’t bought or sold Real Estate before, realtors use what’s called a Comparative Market Analysis (CMA) to help sellers set an asking price or guide buyers in making informed offers. Unlike a property assessment, which is used for tax purposes, a market value estimate by a realtor focuses on the property’s actual selling potential.

• Comparable Sales (Comps): The main tool used for determining market value is a review of recent sales of similar properties in the area, considering factors like size, age, location, and features to determine the value of your home.
• Current Market Conditions: Supply and demand heavily influence market value.
  • In a seller’s market (low inventory, high demand), prices tend to rise, while in a buyer’s market (high inventory, low demand), they may drop.
• Property Features: Key details like the number of bedrooms, bathrooms, square footage, lot size, and condition of the property are considered.
  • Adjustments are made for differences, such as upgrades or lot size.
  • Recent renovations can increase value.
• Location: Location is crucial in real estate because it directly impacts a property’s value, desirability, and potential for future growth.
  • Proximity to schools, parks, transit, shopping, and other conveniences impacts value.
  • Neighborhood desirability and crime rates also play a role.
• Economic Factors: Interest rates, employment trends, and local economic growth can affect what buyers are willing to pay.