US housing market fuels bidding wars and pushes up prices
LOS ANGELES (AP) — Would-be homeowners are increasingly choosing to pay sellers more than their asking price in hopes of getting ahead of rival buyers, as increased competition for a few homes on the market fuels bidding wars.
About 52% of U.S. homes sold in January fetched more than their list price, up from 40.2% a year earlier, according to data from Redfin, a national real estate agency.
It was the largest share of homes sold above asking price ever recorded by Redfin, in data dating back to February 2012.
The trend is apparent in some of the country’s most expensive housing markets. Some 63.2% of homes sold in Los Angeles in January cost more than advertised. In Seattle, that jumped to 65.9%.
These bidding wars drive home prices higher. The median home price jumped 15.4% in January from a year earlier to $350,300, according to the National Association of Realtors.
“The housing market was in a frenzy at the start of 2022, with buyers vying for a limited supply of homes and sellers reaping the rewards of rising prices,” said Taylor Marr, deputy chief economist at Redfin.
Homebuyers face a tough task navigating the housing market, with the number of homes for sale at record highs, prices soaring and average mortgage rates higher than a year ago, and which should rise again this year.
The dynamic has made it more likely that a home for sale will receive multiple offers. In January, 70% of offers submitted by Redfin agents on behalf of clients were for homes that received offers from multiple potential buyers, the brokerage said.
And increasingly, many buyers are going well above the listing price of a home to beat the competition.
Some 5,897 homes in 50 of the largest US metropolitan areas by population have sold this year for at least $100,000 above their list price, more than double a year ago, according to a Redfin report. this week. In its analysis, the company looked at sales data from January 1 through February 15.
California is home to six of the top 10 metropolitan areas where homes sell for $100,000 or more above list price. Los Angeles led the way, with 718 homes selling for at least a six-figure increase over asking price, more than any other major metro area and up from 273 a year ago, Redfin said.
Oakland (580), San Jose (490) and Seattle (488) were next on that list, followed by Anaheim (365), San Francisco (335), San Diego (323), Boston (158), Denver (125 ) and New York (109).
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