Homes are selling for under the asking price in these southern Ontario communities

While the spring real estate market is showing signs of increasing activity, a new report notes a drop in overbidding on homes in southern Ontario.

Last month, there were reports of bidding wars in some GTA communities. Real estate reports show prices increasing and a boost in listings.

But in its latest report, digital real estate platform Wahi, finds a “surprise pullback in bidding competition” in the GTA housing market in April.

After two consecutive month-over-month increases, the share of GTA neighbourhoods in overbidding territory fell to 39 per cent in April, down from 43 per cent in March.

Another four per cent of communities were selling at-asking, while the remaining 57 per cent were underbid, meaning homes are selling for under the asking price.

It was the first time this year that the share of neighbourhoods in overbidding territory declined on a monthly basis, according to Wahi.

When looking only at condos, the share of underbidding neighbourhoods soars to 89 per cent, with just 12 neighbourhoods (nine per cent) in overbidding territory.

It’s a different story in the non-condo segment, which includes detached, semi-detached, and row homes as well as freehold townhouses. Just 39 per cent of neighbourhoods were in underbidding territory for non-condos, with the majority (58 per cent) remaining overbid.

There are a few factors behind the decline in overbidding, Wahi CEO Benjy Katchen suggested.

“The recently announced increase to the capital gains tax may have temporarily discouraged some investors, while other homebuyers could be holding out for lower interest rates,” Katchen said. “At the same time, we saw a large increase in inventory, which means homebuyers are able to take more time to find the right property and even put conditions on offers.”

There were about 16,000 new listings on the market in April, compared to approximately 11,100 at the same time last year. In March, new listings totalled 12,700.

In all, 110 neighbourhoods were in overbidding territory in April, led by Buttonville, in Markham. The remainder of the top five overbidding neighbourhoods were located in the City of Toronto.

This marks a departure from past months when the leaders for homes selling above-asking tended to be concentrated outside of the 416 area code (in March, for example, all five top overbidding neighbourhoods were in York Region).

There were 174 neighbourhoods in underbidding territory last month. Once again, the most underbid neighbourhoods tended to have higher median sale prices, but the spread between these prices and those of the top overbidding neighbourhoods has been shrinking in recent months.

The top underbidding neighbourhoods were distributed across four different municipalities in April, with Eastlake, in Oakville, taking the top spot. Eastlake has been in the top five underbidding neighbourhoods for 11 consecutive months.

The top overbidding and underbidding neighbourhoods are ranked by the median overbid or underbid amount. The median overbid and underbid amounts are calculated by subtracting the list price from the sold price of each individual listing in a given neighbourhood.

These are then ranked by the median of all subtractions and presented as the median overbid or underbid amount.

For more information see the Wahi website.