A home for sale in Toronto's west end on June 17. A data analysis by Wahi found that 76 per cent of homes sold under their asking price in July across the GTA.Cole Burston/The Globe and Mail
The vast majority of homes that sold in the Greater Toronto Area in July did so at levels below their asking prices, according to a new report.
The data analysis, released this week by digital real estate platform Wahi, found that 76 per cent of homes sold under their asking price in July across the GTA.
Wahi also found that 97 per cent of neighbourhoods in the GTA with at least five home sales had a median sale price lower than a home’s list price.
It’s ‘the summer of lowballing’ in Toronto’s real estate market
Underbidding was at its highest level in 18 months, said Ryan McLaughlin, an economist with Wahi.
Casa Loma in Toronto was the most underbid neighbourhood, with a median selling price of $3-million and a median underbid amount of $485,000.
Meanwhile, Toronto’s Danforth neighbourhood saw the largest amount of overbidding, with a median selling price of $1.1-million and the median overbid amount at $66,000.
Only 13 of the 296 neighbourhoods included in the report were in overbidding territory.
Mr. McLaughlin said neighbourhoods most likely to face overbidding on homes were those with a large share of housing below the $1.5-million price point.
“It could be that these cheaper markets are seeing more demand . . . it wouldn’t surprise me that that market is getting pushed up a bit,” Mr. McLaughlin said.
The Danforth is a particularly desirable area, he noted, because of its proximity to downtown, high density of transit routes and relatively low prices.
Mr. McLaughlin said underbidding has previously been driven by the condo market, which is facing an outsized slump, but single-family homes are now also selling below asking in large numbers.
In July, 80 per cent of condos sold below asking, while 73 per cent of single-family homes sold below asking.
The increasing number of homes selling below asking, paired with home sales increasing in recent months, means owners are finally coming to the terms with the fact that their homes have lost significant value from their pandemic peaks and are finally selling at lower prices, said Nasma Ali, a Toronto realtor and founder of One Group Toronto Real Estate.
“Back in 2022 and 2023, sellers were holding on and not coming to grips with a declining price,” Ms. Ali said.
“People were thinking this was just a little blip, but now they realize there’s no end in sight.”
Mr. McLaughlin cautioned that overbidding and underbidding statistics are also affected by seller behaviour, since realtors will sometimes list a home at a low amount to induce a bidding war, or a high price to anchor buyer expectations.
However, he agreed that the fact that underbidding is increasing alongside a rise in sales likely means that sellers are relenting and settling on lower offers for their home.
Ms. Ali said she is noticing that many homes are selling below asking price, even after they were relisted multiple times with lower listed prices each time.
It’s possible that the level of underbidding could be higher than the Wahi analysis shows for some neighbourhoods, she said – especially more expensive suburban homes in places such as the Peel Region.
