Nearly a quarter of US homes sold above their asking price in 2017, with the nationwide average premium coming in at around $7,000 according to Zillow. In 2012, 17.8% of homes – one out of six, sold above its asking price.
In prime hotspots, particularly along the West Coast, however, premiums paid for homes in Silicon Valley and the Seattle region have entered the stratosphere – with record numbers of “modest” residences commanding an excess of $500,000 over their asking price thanks to a flood of monopoly money and stock options showered on employees in the growing technology hubs.
Nowhere is demand more pent up than in the San Francisco Bay Area. In the past four months, 39 homes in Silicon Valley have sold for $500,000 or more over the listing price, says Mark Wong, a real-estate broker with Alain Pinel Realtors, based in Saratoga, Calif.
That figure includes a “lovingly cared for and well maintained home” (read: not updated). The 53-year-old, three-bedroom, one-story house on 0.197 acre in West San Jose got 15 offers and sold to an all-cash buyer for $2.5 million—$815,000 over asking. A three-bedroom, 2,040-square-foot house in the Glen Park neighborhood sold in October for $2.6 million—nearly $1 million over its listing price of $1.675 million. –Wall St Journal
This house in Sunnyvale, CA sold for $2.47 million last September – nearly $800,000 above its asking price:
Between March 9 and Dec 7 of last year, seven Palo Alto, CA homes sold for at least $1 million over asking, with one 2,086-square-foot home selling for $3,250,000 – a $1.25 million, or $63% increase over its asking price of $1,998,000.
Tim Kerns, who sells homes in Menlo Park and Atherton for Coldwell Banker, said the frenzy has extended to Menlo Park as well. He said a West Menlo Park home on a 10,000-square-foot lot was offered at $2,300,000 and sold after only three days for $500,000 above the asking price with eight offers.
Another, smaller home on a 7,000-square-foot lot was offered at $1,998,000 and sold for $2,450,000 (or 23 percent above the asking price) with seven offers.
Jiang said many buyers in the $2 million to $3 million range are from other Bay Area cities such as San Ramon, Millbrae or San Mateo and have a home so they have equity to bring to buying another home.
“The house somewhere else provides $1 million to $1.5 million equity, then they can borrow $2 million,” she said. –Mountain View Voice
This isn’t a new trend for the Bay Area. In 2016, 90.9% of homes sold in Berkeley sold for more than their asking price:
Seattle is a similar story – having experienced the greatest increase in percentage of homes sold over asking in the country, rising from 20% in 2012 to 52% in 2017.
As an example, “a three-bedroom, 3,980-square-foot house in Medina that Charles Simonyi, who recently sold Intentional Software to Microsoft , bought for $3.5 million—$500,000 over the list price, according to public records,” according to The Journal.
In the suburb of Bellvue, WA, attorney Arman Manoucheri dropped an extra $500,000 above the $2.125 million asking price after a three-year search for his dream home (in which he can play his drums at night without bothering anyone).
“My heart dropped. I realized you cannot put a price on this because it couldn’t be duplicated,” says the attorney.
Many bidding wars in the Seattle area are won by people paying all cash. More also are removing contingencies such as inspections and financing, and putting down nonrefundable deposits of $100,000 or more, says Daniel Marinello, director-broker with Windermere Real Estate on Mercer Island. –WSJ
Seattle based Zillow points to a “limited supply and high demand, demographic shifts, a strong economy and favorable financing conditions” to explain the buying frenzy.
Bubbles, bubbles everywhere – but at least one can live in an overpriced house if the housing bubble pops, assuming you can make the payments.