More Than Half of Sales Are Above Listing Price in Some CA and WA Cities
When demand is high and supply is low, home-bidding wars can break out and push home sale prices above their listing prices. In some of the hottest housing markets buyers are bidding against each other to pay more for homes. Using more than 700,000 home sales closed in Q2 2016, new analysis from CoreLogic shows the hottest real estate markets in which home-bidding wars are heating up1. The analysis was done at the city level, and only cities with at least one hundred sales in Q2 2016 were analyzed.
Figure 1 lists the top 30 cities with the highest shares of bid properties in Q2 2016. According to the CoreLogic data analysis, Santa Clara, CA has the highest share of bid properties. Almost eight out of ten properties in Santa Clara that were sold in Q2 2016 resulted in a price higher than the listing price. Milpitas, CA and Fremont, CA follow with more than seven out of ten properties in these two cities resulting in a price above the listing price. Among the top 30 cities, the additional money that, on average, a buyer had to pay in order to win his or her dream home in a bidding war ranges from as low as $12,500 in Thornton, Co to a whopping $232,000 in Los Altos, CA. The additional money paid as a percentage of the listing price ranges from a low of 3.3 percent in Maple Valley, WA to 12.2 percent in San Francisco, CA. Let us pause for a moment and think about this: if you happen to get into a bidding war in San Francisco CA, which actually occurred in six out of ten closed sales in Q2 2016, you’d better be prepared to pay an additional $134,000 for your dream home, which is about 12.2 percent above the listing price.
Bidding wars were most intensified in California and Washington in Q2 2016. Seventeen of the top 30 cities are in California, and eight are in Washington. Figure 2 shows the pre-bubble high, Q2 2015, and Q2 2016 for two of the cities in California and Washington: San Francisco and Seattle. San Francisco has not passed its pre-bubble historical high, and actually the share is lower than one year ago, thanks to its already high home prices. On the other hand, Seattle has surpassed its pre-bubble high and set another record in Q2 2016.
It is also not surprising to see the listing inventory in these two states is below the national average. As Figure 3 shows, the national average months’ supply is 3.75 months, however in California it is 2.6 months’ supply and in Washington it is only 2.04 months 2.
1 CoreLogic MLS data is used for this analysis. A bid property is defined as a property where its closing price is at least $5,000 higher than its listing price.
2 Months’ supply data is from CoreLogic ListingTrends. Months’ supply is calculated by the active inventory count divided by the average of the last 12 months of sold inventory count.
© 2016 CoreLogic, Inc. All rights reserved.
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