Fair Market Value
Understand fair market value in Canadian real estate, how it's calculated, when it's used, and why it's vital for pricing, taxes, and lending decisions.
May 30, 2025
What is Fair Market Value?
Fair market value (FMV) is the price a property would sell for in an open and competitive market, where both buyer and seller act knowledgeably and without pressure.
Why Does Fair Market Value Matter in Real Estate?
In Canadian real estate, FMV is a cornerstone for appraisals, taxation, insurance, and legal disputes.
Fair market value is used for:
- Determining listing or offer price
- Mortgage underwriting
- Capital gains and estate tax calculations
- Divorce and probate settlements
FMV is usually determined by certified appraisers using comparable sales (comps), market trends, and property condition.
Example of Fair Market Value in Action
An appraiser sets the fair market value of a detached home at $720,000 based on recent comparable sales in the same neighbourhood.
Key Takeaways
- Reflects open market sale price.
- Used for taxes, lending, and pricing.
- Based on comps and market data.
- Determined by certified appraisers.
- Key to fair and legal property valuation.
Canadian respondents were more likely to expect an undersupply of development/redevelopment equity capital (63%) than debt capital (46%) in 2027. These are survey expectations, not measured financing volumes. Source: PwC and ULI, Emerging Trends in Real Estate 2027, pp. 136–137. Original chart.
Toronto census metropolitan area housing starts fell from 37,718 units in 2024 to 26,087 in 2025, a 30.8% decline (rounded to 31%). Starts measure construction begun, not completed homes. Source: CMHC, as cited in PwC and ULI, Emerging Trends in Real Estate 2027, p. 145. Original chart.
Illustrative calculation: a $4.5-million value ceiling versus income-based capacity of about $4.25 million at 4%, $3.62 million at 5% and $3.13 million at 6%. Assumes 50-year amortization and 1.15 debt coverage.
Source: Department of Finance missing-middle backgrounder and Budget 2026 Chapter 3, November 5, 2026. Fiscal-year funding starts are not home-completion dates.
