Overbidding on homes is happening in these southern Ontario communities

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Published June 10, 2024 at 12:37 pm

Those looking to buy a home in southern Ontario may want to check out the GTA neighbourhoods where homes are going for over-the-asking price.

Digital real estate platform Wahi keeps an eye on where overbidding and underbidding are happening in the GTA.

Overbidding surged during the pandemic when there were historically low borrowing costs but these days, many neighbourhoods have slid into underbidding territory.

However, with the recent announcement that the Bank of Canada had reduced its target for the overnight rate to 4.75 per cent, borrowing costs will come down slightly. This could impact the real estate market.

“This week’s rate cut from the Bank of Canada will likely change consumer psychology thereby giving homebuyers the confidence to bid on properties,” said Wahi CEO Benjy Katchen in a press release.

In the past, Wahi has noticed a correlation between interest rate expectations and bidding activity. Following back-to-back rate pauses in March and April of 2023, the share of overbidding neighbourhoods soared in May, rising to 68 per cent , up from 57 per cent, the latest report from Wahi noted.

In May, however, the market wasn’t seeing a lot of overbidding activity.

The number of neighbourhoods in the Greater Toronto Area with homes selling for above list price fell to 36 per cent in May, down from 39 per cent in April and 43 per cent in March, the report noted.

Overbidding

When looking at all property types, 110 GTA neighbourhoods were in overbidding territory last month.

The top overbidding neighbourhoods — which are the neighbourhoods with the largest median overbid amounts — were concentrated Toronto, according to the report.

overbidding ontario

Note that when a neighbourhood is in overbidding territory, it doesn’t necessarily mean that every home is selling for above-the-asking price. Instead, it’s a general reflection of overall market behaviour, which can be influenced by seasonal factors, for example, or decisions by sellers, such as to list homes below market value to try and attract more bids.

Underbidding

Underbidding neighbourhoods totalled 180 last month. The top underbidding neighbourhoods were located in desirable, upscale communities. Four out of five had median selling prices north of $2 million and three of five were in Oakville.

underbidding ontario

Next month should provide a better picture on how the Bank of Canada rate reduction will impact the real estate market.

“Wahi’s next Market Pulse analysis will include June home sales and should provide insights into whether the rate cut affects GTA real estate,” said Katchen.

For more information, see the Wahi website here.

Lead photo: Thirdman

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