Overview
Markets do not move in a straight line.
They rise, stabilize and soften depending on interest rates, inventory, buyer confidence and economic conditions. Understanding whether the market is strengthening or weakening helps homeowners, lenders and advisors set realistic expectations before an appraisal.
This guide explains how appraisers interpret rising and softening markets across the GTA and surrounding areas and how these conditions influence value.
Appraisals reflect market conditions at a specific point in time.
If the market is shifting, even slightly, it can influence:
• Comparable selection
• Adjustment decisions
• Lender interpretation
• Risk assessment
• Price stability
• Final value conclusions
Recognizing the market trend helps prevent confusion when the appraisal comes in higher or lower than expected.
How Appraisers Identify a Rising Market
A rising market shows consistent signals that buyers are pushing prices upward.
- Use the Most Recent Comparables
Appraisers prioritize sales that reflect current pricing behaviour.
- Consider Upward Time Adjustments
If relevant sales are slightly older, adjustments may be required to match today’s value.
- Include Clear Market Commentary
Appraisers explain why the market is rising and how this affects valuation.
- Avoid Outdated Sales
Older, lower priced sales may misrepresent current market activity.
- Identify Price Acceleration
Appraisers assess the speed and consistency of rising prices.
How Appraisers Identify a Softening Market
A softening market shows signs that buyers are more cautious and prices may be under pressure.
- Increasing Days On Market
Homes take longer to sell.
- More Price Reductions
Sellers adjust expectations as demand weakens.
- Growing Inventory Levels
More available listings reduce buyer urgency.
- Lower Sale to List Ratios
Homes selling below asking price indicate reduced competition.
- Sales Velocity Declines
Fewer homes sell quickly or close together.
- Comparable Sales Showing Lower Prices
Recent sales trend downward compared to earlier periods.
- Avoid Using Older Stronger Sales Without Adjustments
Earlier high priced sales may require downward adjustments to reflect current conditions.
- Use Recent Sales Even If Limited
Recent data reflects buyer behaviour more accurately.
- Highlight Market Weakness in Commentary
Lenders need to understand why value may be stabilizing or declining.
- Analyze Active Listings
A high volume of listings can signal downward pressure.
- Measure Price Decline Pace
Slow softening is treated differently from rapid decline.
In Rising Markets
• Values may reflect stronger pricing
• Older comparables may underestimate value
• Buyers show increased confidence
• Lenders may still exercise caution depending on volatility
In Softening Markets
• Value may come in lower than expected
• Lenders scrutinize risk more closely
• Appraisers rely on the most recent, conservative data
• Price pressure may reduce upper range valuations
In Rising Markets
• Values may reflect stronger pricing
• Older comparables may underestimate value
• Buyers show increased confidence
• Lenders may still exercise caution depending on volatility
In Softening Markets
• Value may come in lower than expected
• Lenders scrutinize risk more closely
• Appraisers rely on the most recent, conservative data
• Price pressure may reduce upper range valuations
“My neighbour sold for more, so my value must be higher now.”
Not if the market has softened since their sale.
“A rising market means unlimited value growth.”
Markets have ceilings defined by neighbourhood demand and affordability.
“Appraisers ignore market direction.”
Market direction is central to comparable analysis and time adjustments.
“A softening market means my value will collapse.”
Not always. Some neighbourhoods remain resilient even in broader slowdowns.
Do appraisers adjust for rising or softening markets?
Yes. Adjustments occur when comparable sales reflect different market conditions.
Can market direction change quickly?
Yes. Shifts in interest rates or inventory can influence the market within weeks.
Does a softening market always lower value?
Not always, but it can limit upward potential.
Do lenders consider market trends?
Yes. Underwriters use market commentary to assess stability and risk.
If you want to understand how rising or softening market conditions may influence your appraisal, our team can provide a clear breakdown of what today’s trends mean for your property.
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