A two-bedroom, two-bathroom house in Toronto's east end hit the market with an asking price of just under $1.1M. Three days later, is sold for over $1.4M.
Although sales of this type were a dime a dozen in the Toronto area's peak market, the sale described above, of 26 Southridge Avenue, took place less than two weeks ago, on February 24. And it's far from being the only one.
Sales all across the Greater Toronto Area have picked up in recent weeks, with dozens of homes once again selling over their asking price in just a matter of days. As was seen in the 2021 and 2022 run up, many of these properties are going for $100K-300K over asking. In fact, one standout property in particular, a four-bedroom, three-bathroom home in Toronto's exclusive Bridle Path neighbourhood, recently sold in just two days for a staggering $701K over asking.
Toronto Realtor Scott Ingram tracks sold-over-asking data for 416-area freehold homes, and has seen the number of listings selling over their asking price creep up since the beginning of the year, when they comprised just 12% of sales. Over the past three weeks, Ingram says, 39% were selling over asking.
This resurgence is in part thanks to an apparent comeback of the attention-grabbing sales strategy of intentionally underpricing homes -- a strategy that slipped away as the market cooled in 2022. Although 39% selling over asking is "a far cry from the madness last year at this time when it was about 80% selling in this manner," Ingram says, there's one noteworthy strategy change this time around.
"[The] big difference between this year and last is that listings aren't under-pricing by as much," Ingram said, noting that at this time last year, more than half of all 416 freehold sales were selling for at least 20% over asking. "That was largely due to agents setting ridiculously low prices, but also buyers overpaying based on comps and continually setting new price records."
Katie Steinfeld, Broker of Record and President at On The Block Realty Inc., began noticing an uptick in underpriced homes all across the GTA towards the middle of February, particularly for homes around the $1M price point. Realtors in the area have reported for weeks that open houses are filling up, and sought-after properties are once again getting multiple offers, sometimes up to 30, likely giving realtors the confidence to employ an under-pricing strategy.
"I think people feel more comfortable with where they're at and what they can afford, so buyers are starting to come back and take a look," Steinfeld said. "And then the inventory is still a massive issue for us. There's not a lot coming out, so when a good property comes out that fits a lot of people's requirements, it's definitely getting a lot of interest. So I think people are seeing that and switching up the strategy to take advantage and hope that maybe it gets them more money at the end of the day."
As underpricing returns, so too have offer dates, which are likely to thank for properties selling more quickly in recent weeks. Steinfeld points to Vaughan, where in the last week of February, 54% of new listings had an offer date. During the same week in January, that figure was just 16%. Some realtors are even seeing a spike in the number of bully offers coming in, again, typically on starter homes.
"I'm finding most buyers are still coming in reasonably, which is good," Steinfeld said. "I'm hoping that doesn't change. I hope buyers don't start to get that FOMO and feel like they need to overpay."
Both Steinfeld and Ingram note that a seller using the "under-list and hold offers" strategy isn't necessarily going to garner an offer that's worth significantly more than the value of the home, but what it does do is help make the selling process a bit more efficient.
"If there's enough interest -- and buyers have come back sooner than sellers this year, so there are a lot more eyes on every listing -- the holding offers strategy is great for condensing the timeline (i.e. selling your house in a week)," Ingram said. "You also have the benefit of picking a closing date that suits you, as buyers in competition will choose your optimal date to put their best foot forward."
Inventory levels tend to pick up in the spring, and with the GTA market desperately in need of new listings, Steinfeld is hopeful that the renewed buyer activity will give potential sellers the push they need.
"They're seeing homes get a lot more interest and offers, so it might encourage more sellers to get back into that thought process of putting their home on the market," she said. "We've seen the buyers come back. I think now it's the sellers turn to come back into the market knowing that maybe they can make the most of this limited inventory."