More and More GTA Condos Are Selling Below Asking

Higher interest rates and summer’s arrival may have crimped buyers’ willingness to overbid on homes in the Greater Toronto Area last month.

By Josh Sherman | 3 minute read

Bidding over the asking price on available homes on the resale market became much less common across the GTA in June, particularly with condos.

There were many reports about bidding wars returning to the Greater Toronto Area this spring as homebuyers showed renewed confidence when interest rates appeared to have stabilized.

However, as quickly as bidding wars reemerged a few months ago, they seem to be retreating — especially when it comes to the region’s once high-flying condo market.

In July, just over one-third (38%) of GTA neighbourhoods were in overbidding territory, down considerably from 62% in June and 68% in May, according to digital real estate platform Wahi. To identify overbidding and underbidding neighbourhoods each month, Wahi compares the differences between list and sold prices for all types of homes, including condo units and houses, in about 400 neighbourhoods. Those neighbourhoods with fewer than five transactions in a month are excluded from calculations. 

“A decline in overbidding is somewhat to be expected during the quieter summer homebuying season,” says Wahi CEO Benjy Katchen. “However, the rate at which we saw neighbourhoods enter underbidding territory in July suggests that other factors are at play,” he adds. Specifically, the latest back-to-back Bank of Canada (BoC) hikes to the overnight rate have likely sent more potential homebuyers to the sidelines, Katchen explains: “When the Bank of Canada paused rate hikes earlier this spring, we began seeing confidence return to the market. The trend has now reversed somewhat.” 

Condo Buyers Are Bidding Farewell to Paying Above Asking Price 

The one-two punch of BoC rate hikes on June 7 and July 12 appears to have taken even more steam out of the condo market, which was already the less competitive segment when compared to non-condos. Looking exclusively at bidding activity on condos — which include units in low-, mid- and high-rise developments — just 16% of GTA neighbourhoods were in overbidding territory last month, representing a sharp drop from 38% in June. That translates to 19 overbidding neighbourhoods, with an additional 11 selling at asking, and a lion’s share of 86 selling below asking. Among the condo neighbourhoods that are still showing signs of overbidding activity, here are the top five, ranked according to calculations based on percentage changes between list and sale prices.

Although there were four times as many underbidding neighbourhoods in the condo market as overbidding ones, the declines between list and sales prices were generally smaller than what was observed for non-condos. The top two underbidding neighbourhoods for condos (Old Oakville and West Woodbridge, in Vaughan), for example, were only underbid by 6%.

The GTA’s Top Overbidding Neighbourhoods for Non-Condos  

For non-condos, which include detached and semi-detached homes as well as non-condo townhomes, there’s a near even split of overbidding (111) and underbidding neighbourhoods (110) at 48%. The remainder (9) sold at asking. The top overbidding markets for non-condos all saw double-digit percentage differences between sold and list prices, led by the Markham neighbourhood of Wismer, where homes were bid up by a whopping 20%.

The Overall Top 5 Underbidding (and Overbidding) GTA Neighbourhoods  

 Counting transactions for all housing types, the majority (57%) of GTA neighbourhoods were in underbidding territory last month, with an additional 5% selling at asking. Generally, the leading underbidding neighbourhoods in recent months have had higher price points than their underbidding counterparts, and that trend persisted in July. Underbidding neighbourhoods priced between $2 and $3 million were leading the underbidding charge:

Continuing another trend witnessed during recent months, the top overbidding neighhourhoods this July were spread between Markham, Toronto, and Richmond Hill: