Solution 1:

A DataTemplateSelector does not respond to PropertyChange notifications, so it doesn't get re-evaluated when your properties change.

The alternative I use is DataTriggers that changes the Template based on a property.

For example, this will draw all TaskModel objects using a ContentControl, and the ContentControl.Template is based on the TaskStatus property of the TaskModel

<DataTemplate x:Key="OpenTaskTemplate" TargetType="{x:Type local:TaskModel}">
     <TextBlock Text="I'm an Open Task" />
</DataTemplate> 

<DataTemplate x:Key="ClosedTaskTemplate" TargetType="{x:Type local:TaskModel}">
     <TextBlock Text="I'm a Closed Task" />
 </DataTemplate>

<DataTemplate DataType="{x:Type local:TaskModel}">
     <ContentControl Content="{Binding }">
         <ContentControl.Style>
             <Style TargetType="{x:Type ContentControl}">

                 <!-- Default Template -->
                 <Setter Property="ContentTemplate" Value="{StaticResource OpenTaskTemplate}" />

                 <!-- Triggers to change Template -->
                 <Style.Triggers>
                     <DataTrigger Binding="{Binding TaskStatus}" Value="Closed">
                         <Setter Property="ContentTemplate" Value="{StaticResource ClosedTaskTemplate}" />
                     </DataTrigger>
                 </Style.Triggers>
             </Style>
         </ContentControl.Style>
     </ContentControl>
 </DataTemplate>

Solution 2:

Just a quick note for anyone that found this incredibly helpful as I did -

Currently with WPF, it looks like you'll want to use DataType rather than TargetType on your DataTemplate definitions:

<DataTemplate x:Key="OpenTaskTemplate" DataType="{x:Type local:TaskModel}">
     <TextBlock Text="I'm an Open Task" />
</DataTemplate> 

<DataTemplate x:Key="ClosedTaskTemplate" DataType="{x:Type local:TaskModel}">
     <TextBlock Text="I'm a Closed Task" />
 </DataTemplate>