US housing market fuels bidding wars, driving prices higher
LOS ANGELES (AP) — Would-be homeowners are increasingly opting to pay sellers more than their asking price in hopes of edging out rival buyers as heightened competition for 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 brokerage.
It was the greatest share of homes sold above asking price ever recorded by Redfin, in data going back to February 2012.
The trend is apparent in some of the nation’s most expensive housing markets. Some 63.2% of homes sold in Los Angeles in January went for more than advertised. In Seattle that jumped to 65.9%.
These bidding wars are pushing 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 in the beginning of 2022, with buyers competing for a limited supply of homes and sellers reaping the rewards of bid-up prices,” said Taylor Marr, Redfin’s deputy chief economist.
Homebuyers face a difficult task navigating the housing market, with the number of homes for sale at record lows, prices rising sharply and average mortgage rates running higher than they were a year ago, and expected to climb further this year.
The dynamic has made it more likely that a home for sale will receive multiple offers. In January, 70% of offers put in by Redfin agents on behalf of clients were on homes that received bids from multiple would-be buyers, the brokerage said.
And increasingly, many buyers are going well above a home’s listing price to beat the competition.
Some 5,897 homes in 50 of the biggest U.S. metropolitan areas by population have sold this year for at least $100,000 above their listed price, more than double a year ago, according to a report by Redfin this week. In its analysis, the firm looked at sales data from Jan. 1 through Feb. 15.
California is home to six out of the top 10 metropolitan areas where homes are selling for $100,000 or more above the list price. Los Angeles led the way, with 718 homes selling for at least a six-figure bump over the asking price, more than any other major metropolitan area and up from 273 a year ago, Redfin said.
Oakland (580), San Jose (490) and Seattle (488) were the next on that list, followed by Anaheim (365), San Francisco (335), San Diego (323), Boston (158), Denver (125) and New York (109).