Underbidding is Picking Up Steam in the GTA Housing Market

The Greater Toronto Area's real estate landscape is akin to a chessboard, with bidding wars and strategic moves shaping the game. In this edition of our real estate journey, we embark on a comparison voyage, navigating through the waves of underbidding and overbidding that have marked the recent months.

In October, we witnessed a surge in underbidding, a trend that continued for the fifth consecutive month. The figures danced tantalizingly close to the peak observed in January. Fast forward to November, and the underbidding saga reaches its zenith for the year. According to the latest Wahi report, 93% of GTA neighborhoods found themselves in the realm of underbidding, a sharp increase from the 81% in October. 

October unfolded a fascinating story of 86% of GTA neighborhoods entering underbidding territory, painting a picture of a prevailing trend. Despite this, the dream of homeownership remained elusive for many, as listing prices ranged from $1,600,000 to a staggering $4,000,000.

Top underbidding neighborhoods in October showcased the unexpected: more expensive areas taking the lead. Oakville, the City of Toronto, and North York claimed the spotlight, with notable instances like Forest Hill and Lawrence Park witnessing homes selling at a discount, revealing the intricacies of the bidding game.

The tool illuminated the market pulse, indicating that, despite changes, some GTA regions continued to experience "strong demand and steady pricing." A testament to the enduring dynamism in the midst of shifting market sands.

The Numbers Speak

November paints a different canvas, with underbidding activity hitting its highest note for the year at 93%. A dramatic increase from October, this shift sparks intrigue. Wahi's report tells us that 239 out of 256 evaluated neighborhoods were in underbidding territory, with only one playing it safe at asking price and a mere 16 daring to venture into overbidding territory.

Benjy Katchen, Wahi's CEO, chimes in on the symphony of market dynamics. "The effects of higher interest rates are being felt," Katchen notes, highlighting the influence of external factors on the GTA real estate stage. However, a silver lining emerges as he suggests, "now could be a great time to potentially purchase a home."

November's underbidding leaderboard features a Halton Region takeover, with four out of five top underbidding neighborhoods finding their place there. A trend observed in previous months, higher median prices in these areas seem to create a selective pool of buyers, as Katchen explains.

Contrasting the underbidding drama, October saw seven percent of GTA neighborhoods daring to embrace overbidding territory. Markham and North York took the lead, offering competitively priced properties in the range of $1,000,000 to $1,600,000.

Westbrook in Richmond Hill witnessed homes selling at an average of 14% above asking, while Markham's Greensborough neighborhood commanded a 10% premium. The diversity in the GTA's real estate landscape shone through as neighborhoods like Bayview Woods-Steeles, Kedron, and Wismer experienced strong demand.

To fully comprehend the underbidding and overbidding rollercoaster, we must turn our attention to active listings. October 2023 unveiled a 50.1% year-over-year increase, marking ten consecutive months of a staggering 124.8% rise. This surge sheds light on the market's current state and its profound impact on bidding trends.

The surge in active listings hints at a substantial supply of properties, creating an environment conducive to underbidding. With more options on the table, buyers feel less compelled to meet or exceed asking prices. Conversely, in areas with fewer active listings and high demand, overbidding takes center stage as buyers compete for limited available properties.

As we compare October's overture to November's crescendo, the GTA real estate chessboard reveals its ever-changing dynamics. The interplay of underbidding and overbidding, influenced by factors like interest rates and supply, keeps both buyers and sellers on their toes.

The GTA real estate chessboard remains open for the next move. The players, both seasoned and new, must adapt to the rhythm of the market, ensuring success in this ever-evolving game.