What is your home actually worth? It depends on who’s asking

The value of real estate is a hot topic. From the frenzy of the pandemic years to today’s slower pace, real estate prices seem to dominate every conversation. In the GTA, median sales prices have declined from approximately $971,000 in Q4 2024 to $897,500 in Q4 2025—while more affordable northern regions saw the opposite trend, with some areas recording significant price growth.

But here’s where it gets interesting: just because your neighbour’s house sold for $1.2 million doesn’t mean its assessed value will match that price. The sale price of a property is negotiated and agreed upon by two parties, but an assessed value is determined using a more comprehensive, standardized approach.

Whether you’re buying, selling or staying put, it’s important to understand how your property value is assessed.

Market value versus assessed value

Market value is what a property would sell for today, and assessed value is a calculated estimate of your property’s worth as of a specific valuation date.

It’s important to note that they don’t always move in lockstep. Market value can change quickly based on buyer behaviour and market dynamics like interest rates and available supply. Assessed value, however, reflects a property’s estimated worth as of a set valuation date and is used specifically to calculate property taxes.

One way to think about this difference is through the lens of collectibles. Take a rookie baseball card. When it was first bought in the ’80s, it may have cost a dollar. Although the card itself may not have been altered or even touched, what collectors are willing to pay for it can rise significantly based on demand, rarity and the player’s reputation.

The same can happen in real estate: what a buyer is willing to pay at a given moment can shift based on market conditions, even when the property itself hasn’t changed much.

Assessed value, on the other hand, is determined in a more structured way. MPAC (the Municipal Property Assessment Corporation) is an independent, not-for-profit organization responsible for assessing and classifying more than 5.7 million properties across Ontario and assigning a dollar value to each. Municipalities then use these to set and determine property tax rates.

Factors that influence assessed property value

In 2025, MPAC assessed almost 81,000 new residential homes, conducted more than 310,000 property inspections and processed 430,000 sales transactions. In total, MPAC added more than $41.45 billion in new assessments from new construction and improvements to existing properties, including $11.4 billion in Toronto alone.

With more than 200 aspects considered, the process may seem complex, but there are really five key factors that influence assessed property value: location, lot size, square footage, building age (adjusted for renovations) and construction quality.

Certain renovations can affect your assessed value, but not all will. In general, renovations that add living space, improve functionality or increase a home’s utility are more likely to affect assessed value, especially when they require a permit. This includes adding a bathroom or bedroom, finishing a basement, building a deck, installing a pool, adding a garage or creating a legal secondary suite.

Smaller cosmetic updates like new tiling, fresh wallpaper or a coat of paint typically won’t impact your assessed value, even if they make your home more appealing to buyers.

A tool to help you understand your assessment

Through MPAC AboutMyProperty™, a free online tool, Ontario homeowners can review detailed information about their property, learn more about how it was assessed and compare it to others in the neighbourhood. Homeowners can also use the Property Pulse Dashboard in MPAC AboutMyProperty™ to view recent home sales by area and property type.

Whether you’re budgeting for taxes, planning a renovation or deciding when to sell, understanding property values helps you make more informed decisions.

To see how your property was assessed and how it compares to others in your neighbourhood, visit MPAC AboutMyProperty™.