Condominium apartments may be reaching new heights in Toronto, but it's sky high house prices that really has people dizzy.
The average detached property across the Greater Toronto Area now changes hands for just below the million dollar mark, while in the 416, prices sit eerily close to Vancouver levels at $1.2 million.
With prices at record highs, several industry insiders are speculating detached homes will soon be unattainable, pushing would-be buyers further toward more affordable options. Namely stacked townhomes and condo apartments -- even in the suburbs.
The dream of owning a coveted freehold house compounded by tight supply is now sparking heated bidding wars well outside the bounds of Toronto - further north, east and west into what are traditionally commuter cities and towns.
No longer a phenomenon solely tied to the city, the roller-coaster ride of multiple offer situations and over asking bids are increasingly spilling over, and we have the numbers to prove it.
After analyzing price to sales ratio for the entire GTA, we found that of the 16,486 detached homes that sold between January to April 2016, almost 50 per cent (47 to be exact) sold over asking price.
Compare that to the fact 40 per cent of houses sold for under and it becomes shockingly clear: if you're on the hunt for a detached home in the GTA, you're more likely to be pushed to go over asking than closing for below.
When digging a little deeper, we found that 33 per cent of homes sold for at least five per cent over asking and 19 per cent went ten per cent over asking. Based on average home prices, that roughly translates to buyers having to put down $40,000 to $80,000 extra to snatch up a property.
It's a weary number for house hunters who already feeling the pressure of the region's sustained housing boom, particularly buyers keen on getting in the hot York and Durham region markets. There is some solace for condo seekers however, as only around 12 per cent of condominiums sold over asking.
Which cities see the most detached homes sell over asking?
At least 1% over asking
- Ajax - 61% of detached homes sold over asking
- Whitby - 60%
- Markham - 58%
- Richmond Hill - 57%
- Toronto and Oshawa - 56%
At least 5% over asking
- Markham - 50%
- Richmond Hill - 47%
- Toronto - 45%
- Ajax - 43%
- Whitby - 40%
Where do the least over asking sales occur?
- Brock - 10%
- King - 19%
- Uxbridge -22%
- Halton - 26%
- East Gwillimbury and Caledon - 30%
See how all GTA cities fared at TheRedPin
While intentionally under pricing to incite a bidding war is a common strategy, the fact that so many sellers are confident enough one will ensue, and so many buyers are biting, is a testament to the housing market's strength. In fact, since 1996, detached property values in the GTA climbed up over 300% in cities such as Toronto, Vaughan, Richmond Hill and Markham.
A recent report by Urbanation Inc. hints that even in the suburbs, traditionally detached home central, buyers are migrating away from houses and toward condo apartments in response to prices.
"More and more buyers priced out of the single-family home market are looking for alternatives in the condo market, providing a clear opportunity for new development," said Shaun Hildebrand, senior vice president of Urbanation. According to the organization's report, condominium apartments in the first quarter of 2016 jumped a whopping 32 per cent over a 12 month span.
Here are some tips if you're a buyer potentially entering a bidding war:
- Get pre-approved first to get a clearer picture of your budget and how much you can go over asking if you're thrown into a bidding war. A pre-approval also shows sellers you're a high intent buyer and have all the financial paperwork already done
- Speak to your realtor to get a real sense of the market. Do homes always go over asking in the neighbourhood, and if so, what do they actually sell for compared to their listing price? These are answers your agent can provide you with
- Set a maximum dollar amount you're willing to go over asking and stick to it. Don't get swept away into a competitive whirlwind
- Never sacrifice necessary terms and conditions such as waiving a home inspection before the move in date
- Understand that the highest offer doesn't always win. The down payment amount and closing date can have a big impact. Being flexible where it counts, such as letting the sellers stay rent free for a month after closing, can really win hearts
- Many home sellers will stage their home with rented out furniture. Look beyond that and assess the home, not the "fluff"
- Ask questions to see what's on the seller's top list of priorities. Are they looking to close fast? Are they home flippers or are they emotionally tied to the home? It all matters
*Numbers based on January to April 2016
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