Information in this post was brought to you by TheRedPin.com, a challenger brand in Canadian real estate that carries the largest database of home listings in Toronto and Vancouver.
It doesn’t matter where you go – city or suburb – single family houses across the Greater Toronto Area are a hot commodity.
It’s a fact that only reigned more true in 2016, when a shortage of houses for sale coupled with rock bottom interest rates and high demand translated to a spike in the number of multiple offer situations and heated bidding wars.
“Price growth accelerated throughout 2016 as the supply of listings remained very constrained,” said Jason Mercer, the Toronto Real Estate Board‘s Director of Market Analysis. “Active listings at the end of December were at their lowest point in a decade-and-a-half.”
To illustrate just how pervasive over asking bids in Canada’s largest metropolis have become, TheRedPin looked into how many Toronto-area properties sold for over their original asking price in the last year.
The numbers tell a lot.
After analyzing sales price to list price ratio for the entire GTA, we found that around 16,000 detached homes, semis and townhomes sold for at least 10 per cent over their original asking price in 2016 – a huge 161 per cent increase from 2015.
In other terms, roughly 1 in 5 freehold houses sold for at least 10% over asking last year in the Greater Toronto Area.
When digging a little deeper, TheRedPin also discovered the number of freeholds that sold by at least 20% over asking hit approximately 4,800 – up 251 per cent from 2015.
Along with a dearth of supply, the practice of strategically pricing properties under market value to incite multiple offers was likely another culprit behind the over asking bids. While not necessarily proof of wide-spread under pricing, TheRedPin did find a significant 3.6 per cent gap (or an average difference of $30,000) between what freehold houses were listed for versus what they actually sold for in the 2016 calendar year.
On the other end of the spectrum, condominium apartments saw far fewer over asking sales. Last year, only 2 per cent of GTA condos sold for a minimum of 10% over asking. That’s a menial figure compared to the freehold market, where the figure stands at 22 per cent. It’s worth noting however, condos did see an exceptional 356 per cent increase in over asking sales in 2016 when compared to twelve months earlier.
The second consecutive year of record breaking home sales, 2016 saw the average price of freehold houses climb to $887,653 – up 20 per cent or nearly $150,000 more versus 2015. In the face of tighter supply in the high rise market, condominium apartments also experienced a 9.7 per cent increase.