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The Top 6 Factors That Affect a Home’s Value

When it comes to an accurate home valuation, some factors are more important than others. Here are the top six by property type.

By Josh Sherman | 3 minute read

Feb 2

Some say a home’s value is what a buyer is willing to pay for it, but that’s only part of the story.

Having a realistic estimate of a home’s value is crucial for both buyers and sellers. This information can save buyers from overpaying and ensure sellers don’t get short-changed on a transaction. It should also help both parties manage expectations and approach a transaction as prepared as possible.


 

Arguably, a home’s value is simply what a buyer is willing to pay for it. But a dizzying array of factors — including renovations and upgrades, type of property, neighbourhood, local housing market dynamics, and more — can impact buying decisions and, ultimately, values. To help homebuyers and sellers make sense of it all and obtain a realistic valuation instantly, Wahi has developed its own free home value estimator. Using a proprietary home value estimation algorithm, the tool drills down into a variety of property characteristics for non-condos and condos to provide a realistic valuation. Here are the top six factors that affect home value by property type.

 

The Top 6 Factors That Affect Non-Condo Values  

Wahi classifies non-condos as any home without maintenance fees (more on maintenance fees below).

1. Annual Taxes: Property taxes are a big expense and therefore top of mind for many homebuyers. On average, Ontarian households pay $7,969 per year in property taxes. The overall property tax rate is based on both provincial and municipal rates, so they vary based on location and local governance.

 

2. Location: Location, location, location — for many homebuyers, it’s a top priority. Properties in desirable neighbourhoods, where, for example, you’ll find top schools or world-class amenities, command a premium on the open market.

3. Number of Bathrooms: An additional bathroom can increase a home’s selling price by 6%, according to one U.S.-based study, so bathrooms obviously rank high in importance for North American homebuyers.

 

4. Lot Size: The pandemic underscored the value of having access to private outdoor space, as many Canadians left major cities in search of larger properties. While that trend peaked during lockdowns, homebuyers continue to place a high value on lot size.

 

5. Home Size: Wahi’s home value estimator also analyzes a home’s square footage, providing a higher valuation for larger interiors.

 

6. Garage Spaces: Some 83% of Canadians own or lease a car, according to one survey. That suggests there are a lot of two-car households out there, so it’s unsurprising that the number of parking spaces in a home’s garage will have a considerable influence on a non-condo’s value. 

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The Top 6 Factors That Affect Condo Values  

The factors that increase or decrease condo values are similar to those of a non-condo, with some important differences.

 

1. Annual Taxes: As with non-condos, property tax is an important consideration for a property’s value. As taxes are pegged to the estimated value of a home, condo owners have a relative advantage to non-condo owners in this respect.

 

2. Condo Maintenance Fees: Unlike a freehold home, where the owners only pay for upkeep as issues arise and the property ages, condo owners are on the hook for monthly maintenance fees. These can add up. Generally, maintenance fees relate to a unit’s square footage, but the rate itself fluctuates from building to building and year to year.

 

3. Unit Size: Size matters. Unlike a freehold home, condos don’t have lots, so the unit’s square footage takes on even greater importance.

 

4. Location: For any type of property, location will be a huge determinant of value, and condos are no exception.

 

5. Number of Bathrooms: Though not weighted as heavily as they are in non-condo valuations, the number of bathrooms in a condo unit still has considerable influence on the overall property value.

 

6. Number of Parking spots: Not everyone drives, and it’s possible — especially if you live in a centrally located urban condo — to live a car-free lifestyle, but parking comes at a premium in many housing markets. In fact, it’s not unheard of for a parking space in a big city like Toronto to sell for six figures. (The median sale price of a GTA parking spot was $57,000 in 2023.) Clearly, parking can have a big impact on a condo’s value.

 

Josh Sherman

Wahi Writer

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