Underbidding on homes hits near-record high in the Greater Toronto Area

Underbidding on homes hit near-record highs in the Greater Toronto Area last month.

That’s according to the latest Market Pulse report from real estate listing platform Wahi.

The report found the housing market is nearing the highest level of underbidding since Wahi began comparing the differences between monthly list and sale prices for homes across the region in July 2022.

In June, 93 per cent of GTA neighbourhoods with at least five home sales were in underbidding territory, compared to 87 per cent in May and 71 per cent during the same month last year. An additional five per cent of neighbourhoods were overbid, while two per cent were selling at asking, according to the report.

But June is still below January 2024 and December 2023 when 98 per cent of neighbourhoods were seeing home prices bid down. Wahi said seasonality influences bidding trends, as there’s generally less home-buying activity in the summer and winter months.

Wahi CEO Benjy Katchen also noted that buyer competition also varies by property type and location and bidding dynamics often come down to individual listing attributes.

“When a neighbourhood is in underbidding territory, it doesn’t mean that every property is selling for less than asking or that sellers are taking huge losses,” Katchen said. “It’s a general indicator of market behaviour.”

The GTA-wide median amount by which home prices were bid down was $22,450 in June.

Once again, bidding competition in the condo segment was considerably softer than single-family homes, which include detached and semi-detached houses as well as row and freehold townhomes.

Some 95 per cent of GTA neighbourhoods with at least five condo sales were underbid in June, compared to 86 per cent when looking at single-family homes only.

Overall, in June, 71 per cent of all homes across the GTA sold for less than the list price, compared to 68 per cent in May, with the remainder selling above or at asking.

Here, too, there was a significant discrepancy between condos and single-family homes. Last month, 79 per cent of GTA condos changed hands for under asking, while the same was true of 67 per cent of single-family homes.

Home buying competition is strongest in Durham and parts of Toronto. In Durham, 36 per cent of homes that sold in June achieved a price at or above listing, followed by the City of Toronto at 32 per cent.

On the flip side, homes were most likely to sell below asking in Halton, (80 per cent), Peel (75 per cent), and York (74 per cent).

There were no repeats on the latest monthly top five of the GTA’s top underbidding neighbourhoods, which are ranked by the median underbid amount. However, similar to May, these neighbourhoods tended to have higher price points.

The Mineola neighbourhood in Mississauga tops the list this month with the median underbid amount at $275,000.

At the end of each month, Wahi compares the differences between median list and sold prices to determine whether neighbourhoods are in overbidding or underbidding territory, excluding those neighbourhoods with fewer than five transactions in a given month.

A total of 289 neighbourhoods out of the GTA’s approximately 400 met this threshold in June, down from 298 in May. Data is sourced from Information Technology Systems Ontario and the Toronto Regional Real Estate Board.

See the full report from Wahi here.