Overbidding is having a moment again in the Greater Toronto Area (GTA) – especially in York Region. According to Wahi’s latest monthly Market Pulse Report, the wave of overbidding that struck the GTA housing market in February intensified in March, with the arrival of the spring selling season.
This could be the clear sign sellers have been waiting for that a recently subdued market is 'springing' back to life.
In March, 43% of GTA neighbourhoods were in overbidding territory, compared to 25% in February and 35% from a year ago. An additional 6% were selling at-asking, a figure that was roughly unchanged month-over-month, and 51% were underbid, down from 69% over the same period. As recently as January, not one of the GTA’s neighbourhoods were in overbidding territory.
Despite Canada’s persistently high borrowing costs, prospective homebuyers – perhaps growing impatient – are coming out of the woodwork in the GTA. And, some have their hearts set on the same hot neighbourhoods.
“We’re beginning to see more homebuyers step off the sidelines, resulting in more bidding competition in a growing number of neighbourhoods,” says Wahi CEO Benjy Katchen. “That said, with more than half of the neighbourhoods remaining in underbidding territory, a significant number of buyers still appear to be purchasing homes below-asking, particularly in the condo market.”
Competition is particularly stiff in the non-condo market, where overbidding took a notable leap from February to March, highlights the report. About 61% of neighbourhoods were in overbidding territory for non-condo homes in March – up from 39% in February – while approximately one third were underbid. On the other hand, when looking at condo sales, just 14% of neighbourhoods were in overbidding territory in March, up from 7% in February, with the vast majority (82%) still underbid.
Tellingly, all of the hottest markets on the overbidding front are in York Region. They include Cachet, Markham; Jefferson, Richmond Hill; Victoria Square, Markham; Rouge Woods, Richmond Hill; and Wismer, Markham.
As the report highlights, when a neighbourhood is in overbidding territory, it doesn’t necessarily mean that every home is selling above-asking. “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,” it reads.
Meanwhile, the top underbidding neighbourhoods represent a mixed bag and are more evenly distributed throughout the GTA. They include Princess Rosethorn, Etobicoke; The Annex, Old Toronto; King, King; Tyandaga, Burlington; and Eastlake, Burlington.
According to Wahi, in past months, the region’s most underbid neighbourhoods tended to be significantly more expensive than the top overbidding neighbourhoods, but the price gaps between the two narrowed in March as we saw renewed activity across the price spectrum.
While bidding wars have undoubtedly returned to the GTA real estate market, the big question remains whether they'll intensify as we move further into the spring season.
