Ontario’s housing market continues to evolve under the pressure of higher mortgage rates, shifting supply and demand, and broader economic factors. As a result, many homeowners are noticing that their property appraisals and home values have dropped compared to recent years. While this isn’t a housing crash, these changes can deeply affect your ability to refinance, pull out equity, or sell your home.
If you’ve been counting on your home’s value to access extra funds, it’s time to take a closer look at how recent market adjustments could affect your options.
Why Home Appraisals Matter More Than Ever
A home’s appraised value — the professional estimate of the current market value — serves as the foundation for many mortgage decisions. When you refinance your mortgage or seek to borrow against your home equity, lenders rely heavily on this value to determine:
- How much you can borrow: Most lenders cap refinancing or equity take outs at 80% LTV.
- Your mortgage rate and terms: Lower appraised values push your LTV higher, reducing the amount you can borrow or potentially affecting your eligibility for preferred rates..
- Mortgage approval and structure: A lower value could mean you’re no longer eligible for certain products, or that your application needs to be restructured to meet lender criteria.
So, when your home drops in value, your overall borrowing power drops with it — meaning you could be approved for less equity than you anticipated, face higher rates, or in some cases, not qualify under your desired structure.
What’s Causing Home Values to Drop?
These shifts in appraised values aren’t the result of any single event. Instead, several factors are converging in Windsor and beyond:
- Recent market corrections in some areas: Prices aren’t falling off a cliff, but hot streaks have cooled. Slight dips in sale prices trickle down to appraisals.
- Higher interest rates reducing buyer affordability: As mortgage rates rise, buyers’ purchasing power drops, and sellers must lower expectations.
- Fewer comparable sales at high-end prices: With less activity at the top end of the market, it’s harder for appraisers to find recent sales that support peak prices.
- Longer days on market: Homes are taking longer to sell, leading to more negotiating power for buyers and, often, lower final sale prices.
While these aren’t signs of a crash, they’re impactful enough to alter what a lender sees on paper — and lenders rely on those numbers.
How This Affects Your Refinance or Equity Take-Out
Imagine your home was valued at $700,000 last year. If you wanted to refinance up to 80% of that value, you could borrow up to $560,000. But, if your home now appraises at $660,000, your new maximum borrowing amount falls to $528,000 — a $32,000 difference.
This mortgage shortfall may force you to:
- Delay or scale back renovations, investments, or debt consolidation plans.
- Accept less favourable mortgage terms due to higher LTV ratios.
- Reconsider your refinancing timing or lender selection.
What Can You Do If Your Home Value Drops?
To boost your chances of a successful refinance or equity withdrawal, follow these strategies:
1. Get a Professional Opinion Early
Before initiating a refinance or equity take-out, consult with a licensed mortgage broker. They can provide preliminary estimates, assess your options, and connect you with lenders best suited to work with softened appraisals.
2. Prepare Your Home for Appraisal
Not all improvements require major investment. Cleanliness, minor fixes, and professional staging impact perceived value. Presenting documents of any recent improvements or upgrades to your property can help appraisers consider added value.
3. Have a Plan B
If the appraisal doesn’t hit your target, a good mortgage broker can discuss alternatives:
- Different lenders or mortgage products.
- Secondary financing options like second mortgages or HELOCs.
- Waiting for market stabilization if your borrowing needs aren’t urgent
Final Thoughts
A decline in your home’s value can feel alarming, but it doesn’t mean your financial goals are out of reach. Understanding how appraisals influence refinancing and equity access, acting early, and working with knowledgeable professionals will help you navigate these shifts successfully.
If you’re considering a refinance, equity take-out, or home sale in Ontario, connect with a licensed mortgage professional today to explore your options based on the most current market realities. With the right plan, you can still leverage your home’s value effectively—even in a changing market.
