Ontario has long been one of Canada’s most expensive real estate markets, second only to British Columbia in terms of steep housing affordability. However, historically, the hottest price growth has been largely concentrated in the City of Toronto; buyers seeking more affordable options could stretch their dollars in a variety of locales, whether in the outer municipalities of the GTA, or in 18-hour cities in the eastern and southern reaches of the province.
COVID-19 has shifted that reality; markets big and small across Ontario have experienced unprecedented price growth over the course of the pandemic, with the benchmark home price for the province up 19.7% from September 2020, according to the Canadian Real Estate Association. This has been driven in part by buyers’ desire for more space, a willingness to move further from business centres, and an ultra cheap cost of borrowing.
New Listing Shortage Has Amped Up Buyer Competition and Prices
What has truly put a boil under home prices, though, is a persistent lack of supply. The number of available homes for sale has plunged progressively deeper each month in nearly every major market, constraining sales and creating tight sellers’ market conditions across the province.
This means today’s buyers can expect to encounter a bidding war – perhaps several – before they successfully purchase a property. While bidding wars were already prevalent in larger markets, properties in smaller cities and towns are now regularly attracting multiple offers. This often results in homes selling for more than they’re listed for – often by hundreds of thousands of dollars.
These Are the Ontario Cities Where Homes Are Selling for the Most Over List
However, depending on the market, buyers may face greater sticker shock than elsewhere in the province. To find out where in Ontario homes are routinely selling for above their list price – and by how much – Zoocasa analyzed average initial list prices and final sold prices for the month of September in 29 cities, and calculated the percentage difference for each.
The study also examines the level of competition in each market via the sales-to-new-listings ratio (SNLR). This is calculated by dividing the number of sales by the number of new listings over the course of the month, with a range between 40 – 60% indicating a balanced market, and above and below that threshold indicating sellers’ and buyers’ market conditions, respectively.
Lower-Priced Markets Are Seeing Greatest Price Growth
The data reveals homes are selling for more than their listing price by the greatest percentage in small- to mid-sized cities, where homes are listed on average under the $1-million mark. Topping the list is Ottawa, where prices jump an average of 27.8% from a list price of $523,842 to a sold price of $669,874.
Second is Whitby, with a list-to-sold price difference of 16.4%, from $938,831 to $1,092,945. Rounding out the top three is Windsor at an increase of 16.3%, from $389,658 to $453,210. Notably, three of the top-five markets are located in the Durham Region, long considered a hot alternative to the City of Toronto, at a commutable distance.
In contrast, the markets where homes sold below list price by the greatest percentage are generally known for their higher price points. In the municipality of Caledon – a largely rural market with a reputation for big lots and luxurious custom builds – the average sold price of $1,594,531 falls -42.7% below the average list price of $2,784,334. Next is Oakville with a difference of -23.5%, from a list price of $1,718,552, and sold price of $1,495,900.
Bucking the trend is Kingston, where the average sold price of $619,199 falls -9.58% below the average list of $684,804. This overall lower price point is due to the city’s further proximity from major business centres, though it should be noted overall prices have risen 21.1% in the last 12 months due to tight inventory.
What Can Buyers Do to Be Successful in a Bidding War?
While homes selling for far above list price can be an extremely frustrating and jarring experience for prospective buyers, there are steps one can take to prepare themselves in this competitive market.
Focus on Sold Data Rather Than List Price: According to Zoocasa Agent Carlos Moniz, it’s vital to select an agent who has extensive experience navigating bidding wars as well as a deep knowledge of historical home values in your desired neighbourhood. “For first-time buyers especially, it’s almost as though you have to disregard the list price and focus on sold data to get a realistic idea of what the home may sell for,” he says. “Once I’ve shared the solds with buyers over the last three to six months, they have a much better picture of what’s affordable in their budget.” This is especially important insight to have as many homes for sale may be listed below market value in order to draw more eyeballs and a higher number of bids.
Prepare Your Price Ceiling: While buyers may fear being pressured into overpaying, Moniz emphasizes that, ultimately, they are in control of what they’re putting down and need to be comfortable with that number. Do your due diligence regarding pre-approvals, financing, and down payment sources before starting your house hunt, he says, to avoid last-minute scrambles and potentially overcommitting financially on offer night.
Be a Bully: Submitting a bully offer – making an aggressively-priced bid on a property before the official offer night – can be an effective way to avoid competition says Moniz, especially if the sellers are keen to close the deal. However, he says fewer listing agents may be willing to consider bullies in today’s market, given inventory is so low and competition is so fierce. If the opportunity does present itself, though, it can pay off to be prepared. “Get the home inspection if the sellers have prepared one beforehand and review it before you see the property, which will ideally be the same day it goes on market,” says Moniz. “And, have your financing sorted and solid. If you’re able to put together a strong offer, that can incentivize the sellers to take it”
Sources and Methodology:
Average sold prices and list prices were sourced on October 8, 2021, from the Toronto Regional Real Estate Board, London-St. Thomas Association of REALTORS, Barrie and District Association of REALTORS, Kitchener-Waterloo Association of REALTORS, REALTORS Association of Hamilton-Burlington, Ottawa Real Estate Board, and the Windsor-Essex County Association of REALTORS. All prices are average prices. The percentage difference between the average sold price and average list price was calculated for each city.
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