It’s no secret that the real estate market is going through some crazy shifts in 2025. You just have to look around your neighborhood to see that for-sale signs are actually making it out on to lawns now after months of homes not even being for sale long enough for agents to hammer one in.
With the market cooling in response to inflation and rising interest rates, you may be wondering if this is all affecting your real estate value and how real estate value is assessed in the first place.
To figure this out, it’s important we sort out some terms first.
Market Value Vs. Property Assessment
Often you’ll see the terms Market Value, Property Value, and Property Assessment thrown around and not realize that they are two different things. So, let’s quickly clarify each:
Market Value / Property Value
Market value, or even more confusingly “property value,” is an evaluation of your home’s current real-world sale value in the current housing market.
If you want an accurate sense of your home’s worth, you can hire a professional licensed real estate appraiser. Professional appraisers will look at comparable properties in your community and then use a standard-deviation sheet to adjust for the differences between local properties.
Real estate agents do much the same, but they tend to make these kinds of adjustments based on their instincts and previous experience selling in your local market. They can also factor in things that an appraiser might not include in their assessment, such as decor and landscaping, the popularity of certain streets or locations, etc.
Sometimes your home’s property assessment can be used when estimating it’s market value.
Property Assessment
Your Property Assessment is the assessment that your municipal government sends you with your property tax bill and it is done in order for them to charge you the correct percentage of property taxes.
Rarely the city may send an assessor to come to your property to inspect it, but most often it’s just completed remotely using the software. This means their calculation typically leaves out any renos that have been done without permits (like windows or flooring, updated bathrooms, etc), general maintenance, paint and finishes, landscaping, and other aesthetics.
For these reasons property assessments are often on the low side (which avoids reassessment requests) and don’t reflect real market values.
What Causes Home Values to Increase (or Decrease)?
Property assessments tend to just rise slowly to reflect growing populations and amenities in your area like schools, community centers, public transit, walkability scores, access to shopping, etc.
Market Values are much more volatile increasing primarily due to supply and demand which are heavily influenced by inflation and interest rates, which is why we’re seeing such dramatic shifts in 2025.
Of course, there are many factors that affect the demand for any particular property other than it being a buyer’s or seller’s market, including:
- Home Condition. If there is any damage to the home or the home is in need of repairs?
- Home Age. Is the home new or historic?
- Curb appeal. The general attractiveness of the property and its surroundings, including outdoor finishes landscaping, and other aesthetics.
- Luxury Items. Extras such as a pool, major appliances being included, or other extras like solar panels or energy-saving appliances.
- Recent Renovations. Has the home undergone any significant and desirable upgrades?
- Size. Square footage, number of bedrooms, and property size.
- Local Amenities. Close by schools, community centers, public transportation and shopping.
- Community Desirability. Is the home in a sought-after area, or a growing community?
- Comparable properties. How much have properties in the area with similar features sold for recently?
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Conclusion
Market value and property value refer to the estimation of your home’s real-world sale value in the current housing market whereas your home’s property assessment is a calculation done by your municipality to charge you the appropriate property tax amount.
Both are important and will affect your bottom line but in very different ways.
While these two values can overlap in the factors they use in their calculations — such as local growth and home size — they are usually vastly different from one another and can differ greatly.
While there is usually little you can do to influence your property assessment, there is a great deal you can do to add market value to your home before selling (click the link for more information).
FAQ
How Can You Increase the Market Value of Your Home?
Though much of it has to do with inflation, interest rates, population growth, a growing economy, and trends toward suburban or urban living (referred to as market appreciation) you CAN increase the market value of your home with upgrades, updates, and maintenance (or forced appreciation).
How Do I Know if My Home Value Has Gone Up?
Unless the real estate market in your area is declining, or your home is deteriorating, it’s safe to assume your home value is increasing. To be sure, you can hire a professional appraiser, or real estate agent to assess the market value of your home.
thewriteDuffy
At home, April is a mom, wife, and DIY darling. Among other home projects, she helped her husband Dan renovate their 1986 bungalow and is currently designing and decorating the 2023 custom home they are building themselves. Professionally, April is a writer, author, and online marketer with 15 years of experience writing for newspapers and magazines, building online authority websites, and publishing books.
With any project, 80 percent of the work is done in the planning stage. We have simple checklists to help you get organized and make sure you’re prepared for every step along the way. Download them now for FREE: