The LRT is the latest reason why the true worth of a house — what someone is willing to pay for it — can be very different from its market-value assessment. Here, we compare list price, selling price, and the price it was assessed at in 2012.
An exquisitely modernized bungalow in a peaceful east-end neighbourhood close to downtown sold recently for $169,000 above its market-value assessment. One of many things it had going for it, according to the real estate agent, was its proximity to the future Blair LRT station. From now on, the LRT is certain to have a growing impact on property values (and, by extension, market-value assessments) of houses located close to its stations.
That property near the Blair station represents one extreme; at the other end of the scale, a million-dollar house in Rockcliffe Park, bastion of Ottawa aristocracy, sold for $162,000 below what assessors deemed it to be worth. (Though that was most likely due to softness in the market for million-dollar houses and had little or nothing to do with the LRT.)
It’s not unusual for houses to sell for much more — or less — than their assessment. Don’t blame the assessors, experts say. There are several reasons for the anomalies. Some neighbourhoods — such as the Glebe and Westboro — are hotter than others, meaning the assessments become outdated by fast-rising house values. Plus, some owners have massively upgraded the interiors of their homes, a fact usually unknown to the assessors. It’s only when upgraded houses are sold that assessors learn their true value. The same goes for neglected or shabby houses, which are likely to sell for less than their assessed value. Says Ottawa real estate agent Brent McElheran: “Location is usually the biggest factor that contributes to values.”
People love to complain that rising assessments result in higher property taxes. But that’s not true unless your property is deemed to have risen in value by more than the city-wide average. Over the past four years, houses in Ottawa rose in value by an average of 3.6 percent, far less than the provincial average of 18 percent.
When it comes to calculating property taxes, it means that the average assessment in 2017 will be only about one percent higher than it was in 2016.
So how do market-value assessments compare with actual selling prices? In a random selection of 20 recent sales on Ottawa’s multiple-listing service, 14 houses sold for more than the assessed value and six sold for less. But that’s not surprising, since the assessments were done in 2012. (New assessments were done in 2016 and will determine each owner’s share of property tax from now until 2020.)
From those 20 sales, here’s a look at the five houses that sold for the most above — and the five that sold for the most below — their assessed value: