Here Are the Markets Where Homes Are Selling For $100,000 Over Asking Price

Nationwide, 5,897 homes sold for at least $100,000 over asking price at the beginning of this year, up from 2,241 during the same period last year, according to a new report from real estate brokerage Redfin.

This is according to a Redfin analysis of sale prices versus list prices in the 50 most populous US metros from Jan. 1 through Feb. 15 compared with the same period last year.

Scarcity Driving Frenzy

Homebuyers are paying up in an effort to beat other bidders competing for the few homes on the market. January was the most competitive month on record, with 70% of home offers written by Redfin agents facing bidding wars (adjusted for seasonality). 

Partly as a result of fierce competition, the median home-sale price rose 14% year over year to $376,200, just shy of the all-time high.

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.

Bidding Wars May Ease by Summer

“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,” Redfin Deputy Chief Economist Taylor Marr said in prepared remarks. 

“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.”

Imminent Interest Rate Hikes a Factor

Crystal Sunbury, real estate senior analyst with RSM US LLP, tells GlobeSt, that the anticipated interest rate hikes, coupled with inventories at record lows (there were 860,000 existing units in January) have continued to fuel sales as prospective buyers look to secure their home purchase before higher rates kick in with “many willing to pay higher prices to secure a lower interest rate.”

Sunbury added that while a higher price on a home means a higher down payment, interest rates tend to have a greater impact on monthly payments than the price of the home itself. 

Based on Redfin data, of the nearly 6,000 homes sold for at least over $100,000 from Jan.1 to Feb. 15, half were in metros where median prices range from $800,000 to over $1.3 million  (Los Angeles, Oakland, San Jose, Anaheim, San Francisco, San Diego and New York). 

“If we take an $800,000 mortgage, the impact of even a 1% interest rate increase on a 3.5% 30-year mortgage would be about $461 per month, compared to $449 for a $100k price premium. 

“And likely, the majority of the homes selling for these large premiums are far above the median price, which means bigger savings if a buyer can secure lower interest rates.”

Pricey California Metros Top the List

Six of the top 10 metros where homes are selling for six figures above list price are in California. The Los Angeles metro area led the way, 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 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.

Removing Contingencies

“With record low inventory there simply is not enough supply for buyer demand, resulting in more and more bidding wars,” Stacie Egan Bender of Heritage House Sotheby’s International Realty in Rumson, N.J., tells GlobeSt.com. “Bidding wars are happening in all price points across the country and buyers and their agents need to be savvy in order to secure a home. Price is obviously a key driver in having an offer accepted and buyers understand if there are multiple offers it will inflate the price.”