People are overbidding on homes in these 5 Toronto neighbourhoods

Bidding competition in the Greater Toronto Area resale market has softened, but there are a few neighbourhoods where homes are going for over the asking price.

A new report from digital real estate platform Wahi shows that fewer neighbourhoods were in overbidding territory in May, despite it typically being the peak of the spring housing market.

Wahi found that seven per cent of GTA neighbourhoods with at least five resale transactions were in overbidding territory in May, down from 13 per cent in April. Meanwhile, 92 per cent of neighbourhoods sold below asking and one per cent sold at asking, underscoring that much of the resale market remains buyer-friendly, Wahi said.

“For the third straight year, the traditionally busier spring market seems to have evaded the GTA,” said Wahi economist Ryan McLaughlin. “On the plus side, this favours homebuyers, who are far less likely to encounter bidding wars than they would be in a normal spring market.”

As in previous months, Toronto’s east end has seen some of the strongest overbidding. Also, the majority of the top five overbidding neighbourhoods in recent months have been found within the City of Toronto.

These trends held true in May. Three of the top five overbidding neighbourhoods were from Toronto’s east end (Riverdale, the Beaches and the Danforth) and all were located within the 416.

Wahi notes that a variety of factors can influence bidding trends, from seasonality to selling strategies. In some cases, realtors may price a home below market value in hopes of attracting multiple offers.

The top underbidding neighbourhoods were in neighbourhoods where median sale prices ranged from $2.1 million to upwards of $3 million, Wahi noted.

Single-family homes saw a big drop in overbidding. Some 12 per cent of GTA neighbourhoods with at least five single-family home sales were overbid in May, down from 21 per cent in April, according to Wahi.

Condo overbidding remained limited, with one per cent of neighbourhoods in overbidding territory compared to three per cent the month prior.

Wahi suggested buyers who were previously considering a resale home are setting their sights on pre-construction properties thanks to Ontario’s recently announced HST rebate on new homes.

In March, the Ontario government announced it was broadly waiving HST on new homes priced under $1 million, saving potential buyers up to $130,000.

“That should certainly be enough to encourage some buyers to purchase a new home, though it’s difficult to gauge to what extent the incentive is affecting the resale market,” said McLaughlin.

While the Wahi analysis includes sales data for all property types, it does not count new or pre-construction home sales.

See the full report from Wahi here.