In theory in real estate, the list price of a home is designed to give potential buyers a pretty clear indication of what the sellers are hoping for. In Toronto’s housing market, however, list prices can mean almost anything. Some homes are put on the market at oddly low prices that immediately suggest the agent is trying to arrange a bidding war. These can be the homes that gain eye catching headlines for how much over asking a house sold for, as the articles seldom add how much below market value the home was listed at.
Other properties hit the market at fair prices that seem to reflect market value and sell in line with expectations. The most interesting homes are the ones where the sellers and their agent believe they have priced the home for a bidding war, only to learn the interest is not there. Offer night comes and goes with no bidders or no one willing to buy above the ask price. These are often the homes that relist at a higher price or sit on the market.
Source: TREB, Six Housing Sense
Last month, of the 35 communities captured under Toronto’s housing statistics in TREB’s monthly report, 11 had an average sale price above their average list price. This number perfectly matches the end of year totals for 2018, when 11 neighbourhoods achieved the same feat. These numbers are in comparison to the rest of the GTA communities, where not one of the 30 cities or towns outside of Toronto had an average sale price at or above their average list.
Source: TREB, Six Housing Sense
Looking at the numbers by housing type, we see that semi-detached homes are most likely to sell for over asking price. A majority of the neighbourhoods tracked by TREB (18 of the 35) had higher sale price averages than list. That said, this number is a decrease from March 2018, when 22 communities were above asking for semis. The stats also showed that semis had the highest margins as well. Six neighbourhoods had sale prices outperform list prices by 10% or more (peaking at 19%).
Despite the slower price growth, the detached market surprisingly out performed the condo market, with 12 neighbourhoods coming in over ask compared to 10 for condos. Like semis, both of these numbers are down from March 2018, when they each had 15 communities over asking. In comparison to semis, only two neighbourhoods finished more than 10% higher than list for detached homes and no district got that high for condos.
For many neighbourhoods, while the average sold price may be above asking the margins were small. Most averages were less than 5% over. The one neighbourhood that has consistently outperformed all others is Toronto E01, or Riverdale. The sought after area finished March with the average sale price 12% above the average list. By housing type, its detached market was 16% above, semis were 17% and condos were 6%. These numbers were not unique either, Riverdale has led Toronto in sale price over asking every year since 2013, when it tied in first.
Given that no other city or town in the GTA is experiencing the same level of over asking sales as Toronto, the question has to be asked how much weight should we put into an above ask sale? With so many homes deliberately priced lower, its hard to credit the sellers with getting over asking, especially when some refuse to accept their original list price when offered. As the OREA debates whether or not bully offers should be allowed, maybe the practice of questionably low list prices should also be reviewed.