Home prices have been on the rise for some time, spurred by low interest rates and a lack of available properties compared to red-hot buyer demand. This competitive environment is pushing home sales over their initial list prices in many cities across Ontario, just not where you may expect.
In a recent affordability report, Zoocasa reported that Ontario homes are selling for more than their listing price by the greatest percentage in areas where properties are listed under the $1-million mark, usually in small or mid-sized cities. By contrast, communities where homes tend to go for under their list price by the greatest percentage are historically known for their higher price ranges, such as Toronto.
Zoocasa explained that a shortage of new homes hitting the market has been creating tight seller’s markets and higher prices across the province. These pressure-cooker-like conditions mean that current buyers are likely to encounter a bidding war or two on their journey to homeownership, pushing home sale prices thousands above their original asking price, the Toronto-based brokerage said.
“While bidding wars were already prevalent in larger markets, properties in smaller cities and towns are now regularly attracting multiple offers,” noted the report. “This often results in homes selling for more than they’re listed for – often by hundreds of thousands of dollars.”
To determine where properties are regularly selling for above their list price, Zoocasa analyzed average initial list prices and final sold prices for September in 29 Ontario cities, then calculated the percentage difference for each.
The brokerage also examined the sales-to-new-listings ratio (SNLR) for each city, which analyzes market competition by dividing the number of sales by the number of new listings over the course of a month. A 40 per cent to 60 per cent range is indicative of a balanced market, while percentages that hit under or above that margin spell buyer or seller market conditions.
For Toronto, Zoocasa calculated that home prices have been selling 7.02 per cent below their average list price of $1,191,064, usually for a sold price of $1,107,402. Toronto ranked below Mississauga, Hamilton and Vaughan, where sold prices tend to go for 6.72 per cent, 4.99 per cent and 1.51 per cent below their asking price.
Toronto’s SNLR is currently set at 56.09 per cent, which indicates that market conditions are balanced.
Topping the list of 29 cities, Ottawa reported that the average selling price of a home ($669,874) typically goes for 27.88 per cent above the average list price of $523,842. This was followed by Whitby, Windsor, Oshawa and Ajax, communities where sold prices are greater than their average asking price by 16.42 per cent, 16.31 per cent, 14.53 per cent and 13.33 per cent.
“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,” noted the report.
The SNLR in Ottawa is 68.57 per cent, establishing the city as a seller’s market.
Cadelon ranked at the bottom of the list. Described as a “largely rural market with a reputation for big lots and luxurious custom builds,” sold prices ($1,594,531) generally fall 42.73 per cent below the list price ($2,784,334).
