Key Factors Influencing Price Ranges in Comparative Market Analysis

When buying or selling a property, understanding how the price range is calculated in a Comparative Market Analysis (CMA) can make a significant difference. But what exactly shapes the price range? Below is a break down of the key factors that influence the price range.

Location and Neighborhood Characteristics

No surprise, the first factor I consider when finding comparable homes for a subject property is location. Location remains one of the strongest drivers of property value and that includes within a neighbourhood:

• Proximity to amenities: Homes near schools, parks, shopping centers, and public transport, all tend to command higher prices.

• Neighborhood reputation: Areas known for safety, good schools, and community appeal often have higher property values. This factor is especially true of micro-neighbourhoods such as Scotia Heights and Norwood Flats.

• Future developments: Planned infrastructure projects or commercial developments can increase demand and push prices up.

  
  

Property Size and Layout

The second factor I consider when searching for appropriate comparables is property size; both the land and the building can directly impact the price range.

• Square footage: Larger homes generally have higher prices, but the price per square foot can vary based on other factors.

• Number of bedrooms and bathrooms: More bedrooms and bathrooms typically increase value.

• Functional layout: Open floor plans or well-designed spaces can add value beyond just size.

  
  

Condition and Age of the Property

The third factor that must be considered once similar sized homes have been found in similar neighbourhoods, is the state of the property. Property condition plays a crucial role in setting the price range.

• Recent renovations: Updated kitchens, bathrooms, and new flooring can increase a home’s market value.

• Maintenance level: Well-maintained homes attract higher offers compared to those needing repairs.

• Age of the home: Older homes may have charm but might require more upkeep, which can lower their price range.

The Analysis

Once I've gathered no less than three but preferably five homes that are as comparable to the subject property as possible, I consider the following:

Comparable Sales Data

• Sale prices: Recent sales provide a benchmark for setting the price range.

• Time on market: Properties that sold quickly at or above asking price suggest a strong market, potentially raising the price range.

• Price trends: Rising or falling prices in the area influence the expected price range.

  
  

Market Conditions and Timing

• Supply and demand: A seller’s market with low inventory can push prices higher, while a buyer’s market may lower them.

• Interest rates: Lower mortgage rates often increase buyer demand, supporting higher prices.

• Seasonality: Certain times of the year, like spring and early summer, usually see more activity and higher prices.

  
  

Unique Features and Upgrades

• Energy-efficient systems: Solar panels, new HVAC systems, or smart home technology can add value.

• Outdoor spaces: Well-landscaped yards, decks, or pools often increase appeal and price.

• Views and privacy: Properties with scenic views or extra privacy can command premium prices.

  
  

Legal and Zoning Factors

• Zoning regulations: Properties zoned for commercial use or multi-family units may have higher values.

• Easements or liens: Legal encumbrances can reduce a property’s market price.

• Permits and approvals: Proper permits for renovations or additions support higher pricing.

  
  

Finally, the price range suggested by the comparable homes is considered in light of the municipality's property assessment and the neighbourhood's market increase over time to provide the Comparative Market Analysis price range.

Call me if you, or anyone you know, needs a thorough Comparative Market Analysis to help assess the value of a home.