US sees rise in homes selling for more than their asking price

Almost a quarter of property sales in the United States were for above the original asking price last year with homes selling on average for $7,000 more than listed, new research shows.

Some 24.1% of homes sold above the asking price in 2017, up from 17.8% in 2015 as a combination of strong demand and limited supply pushed up the amount buyers have been prepared to pay, according to the market report from real estate firm Zillow.

The typical price increase for homes that sold above the listed price was 3.1% and more than half of home sales in San Jose, San Francisco, Salt Lake City and Seattle went for more than the listed prices.

The data also shows that young adult renters are increasingly feeling confident enough to buy, but they are entering a market with very few homes for sale, as inventory has been steadily declining for almost three years.

Indeed, low interest rates have buoyed buyers’ budgets, raising the limits on what they can afford and may be willing to pay. While in such competitive times the typical home is selling in 80 days, including the time it takes to close on the sale.

In San Jose, San Francisco and Seattle, the average home sells in less than 50 days and the report says that fierce competition means buyers may not win a home on their first offer. The typical buyer spends more than four months home shopping and has to make multiple offers before an offer is accepted.

‘Low interest rates and strong labour markets with high paying jobs have allowed home buyers in some of the country’s priciest housing markets to bid well over asking price,’ said Zillow senior economist Aaron Terrazas.

‘In the booming tech capitals of the California Bay Area and Pacific Northwest, paying above list price is now the norm. In the face of historically tight inventory, buyers have had to be more aggressive in their offers. We don’t expect this inventory crunch to ease meaningfully in 2018, meaning buyers will be facing many of the same struggles this year,’ he added.

In San Jose, San Francisco, Salt Lake City and Seattle, more than half of all homes sold last year went for above the list price. The average home sold above list in San Jose netted sellers an additional $62,000, the largest difference between list and sale price of the metros analysed.

Over the past five years, Seattle saw the greatest increase in the share of sales that were above the asking price, from 20% in 2012 to 52% of sales in 2017. The amount over asking price grew as well, from 2.5% to 5.3% above the listed price.

Miami homes were least likely to sell for more than the listed price last year, followed by Virginia Beach and New Orleans.

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