Bidding wars are making a comeback in the GTA’s housing market
The neighbourhood with the hottest overbidding, Victoria Square in Markham, has an average overbid amount of C$255,000.
Parts of the Greater Toronto Area (GTA) are experiencing a comeback of overbidding, with the majority of overbid neighbourhoods in Toronto, Markham, Pickering, Brampton, and Ajax.
On March 6, an industry report from Wahi, a real estate agency in Toronto, revealed that 25.1 per cent of GTA neighbourhoods are in overbidding territory, meaning the majority of homes in those neighbourhoods are sold above their asking prices.
The increase in overbid properties contrasts the real estate scene in December 2023 and January 2024, when GTA neighbourhoods were rarely overbid, a trend that is typical during the winter months.
Despite many homes in GTA neighbourhoods being underbid during the winter months, some homes continued to receive overbids, particularly those below the price of one million dollars.
According to Wahi CEO Benjy Katchen, houses below the price of one million dollars were still overbid at the start of the year. Despite the overall market trend experiencing underbidding, homes in that price range received as many as 60 offers, sometimes even more.
In the GTA, 210 neighbourhoods, or 69.3 per cent of neighbourhoods, were underbid and 17 neighbourhoods, or 5.6 per cent of neighbourhoods, were sold at the asking price. Underbidding occurred primarily in neighbourhoods with high asking prices, which surpassed typical buyer budgets and instigated negotiations.
Condos also saw an increase in overbidding, but not to the same level as that of houses. Ten of 138 neighbourhoods, or 7.3 per cent, sold above asking in February 2024, compared to zero in January 2024. Seven of the 10 overbid neighbourhoods were in Toronto, where in 2021, 23.9 per cent of occupied buildings were condominiums, a number only surpassed nationally by Vancouver.
Although the condo market is showing signs of climbing back up, Katchen believes that condos are in the safe zone when it comes to overbidding. “It appears condo buyers are less likely to face a serious bidding war.”
Factors that impact the real estate scene
It is important to note that seasons are an important factor that influence bidding activity in neighbourhoods. In many geographical real estate markets that experience fluctuating weather seasons, property sales differ, sometimes quite significantly between months.
According to data from the Toronto Regional Real Estate Board (TRREB), March to June have consistently been the busiest in terms of properties sold, while December and January maintain the lowest numbers of properties sold. In a city like Toronto, which experiences very defined seasons, the harshness of winter can discourage buyers from engaging in purchases.
Besides weather, other factors related to the seasons can impact real estate activity. Families with children, for example, may avoid looking to move during the middle months of the school year to minimize academic disruption. Moreover, holiday months, specifically November to January, experience diminished sales as individuals become busy with end-of-the-year celebrations and activities.
Interest rates are another key component in understanding bidding trends. Katchen says, “The Bank of Canada’s rate hikes last year are clearly having an impact on real estate markets across southern Ontario.” However, as interest rates stabilize and possibly even decrease this year, “now could be a great time to potentially purchase a home,” according to Katchen.
Despite underbidding trends at the start of the year, the market is emerging from its slumber as the real estate scene will become more active as demand increases from February to the start of Summer. The TRREB forecasts a significant rise in sales this year of up to 77,000, 11,000 more than 2023’s 66,000.
Associate News Editor (Volume 50) — Samuel is a first-year student at UTM working towards an Economics degree. He previously worked with the Federation of Canadian Secondary Students as a writer in the Demystify Tribune and will be continuing his exploration into writing and journalism as an Associate Editor with The Medium. When he's not drawing graphs or outlining essays, Samuel can be found playing the piano and drums, working out, or critiquing film.