Nearly 6,000 Homes Sell for $100,000 Above Asking Price So Far in 2022
MBA NewsLink Staff
Redfin, Seattle, said low housing inventories, rising mortgage rates and double-digit home price increases have homebuyers willing to pay up—and up and up.
Redfin reported 5,897 homes sold for at least $100,000 over asking price at the beginning of this year, up from 2,241 a year ago. The analysis of sale prices versus list prices in the 50 most populous U.S. metros from Jan. 1-Feb. 22 found homebuyers are paying up in an effort to beat other bidders competing for the few homes on the market.
Redfin said January was the most competitive month on record, with 70% of home offers written by Redfin agents facing bidding wars. Amid fierce competition, the median home-sale price rose 14% year over year to $376,200, just shy of a record high. Additionally, many buyers of homes that closed in the beginning of 2022 were rushing to take advantage of 3.1% December mortgage rates before they started to rise. The average 30-year rate was 3.76% for the week ending March 3, down from the February peak but still substantially higher than the record lows reached last year.
“The housing market was in a frenzy in the beginning of 2022, with buyers competing for a limited supply of homes and sellers reaping the rewards of bid-up prices,” said Redfin Deputy Chief Economist Taylor Marr. “Buyers are likely to face strong competition at least through the next few months as demand is buoyed by the temporary drop in mortgage rates fueled by the Russian invasion of Ukraine. But bidding wars may ease a bit by summer as more new listings come on the market and mortgage rates resume their rise. Homes are still likely to sell above list price, but the premiums will probably be lower.”
Redfin reported six of the top 10 metros where homes are selling for six figures above list price are in California. Los Angeles led with 718 homes selling for at least $100,000 over asking price, more than any other major metro and up from 273 a year ago. Los Angeles was followed by Oakland (580). Next came San Jose (490), Seattle (488), Anaheim (365), San Francisco (335), San Diego (323), Boston (158), Denver (125) and New York (109).
Los Angeles Redfin agent Sylva Khayalian said L.A. has the most homes selling for substantially above list price partly because it’s so pricey, and partly because it has more home sales than almost all other major metros. Home prices rose 15% year over year in January to a median of $825,000, making it the second-most expensive place in the country to buy a home, after the Bay Area. The rest of the top 10 are also expensive compared to the U.S. as a whole.
“On top of a lack of homes for sale, which makes everything a hot commodity, buyers are just plain eager,” Khayalian said. “They’re anxious to purchase a home ASAP because as rates rise, they won’t be able to afford the homes they’re looking at now and they’ll soon have to drop into a lower price range. People are willing to bid up home prices because they want to be done with their search.”
