At the same time last year, 2,400 homes had sold for at least $100,000 over asking. Americans were competing for a limited number of homes for sale at the beginning of this year, trying to get ahead of rising mortgage rates—and they paid up to win.
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. The Los Angeles metro area led the way, with 718 homes selling for at least $100,00 over asking price, more than any other major metro and up from 273 a year ago.
This is according to a Redfin analysis of sale prices versus list prices in the 50 most populous U.S. metros from Jan. 1, 2022 through Feb. 15, 2022, compared with the same period last year.
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.
Housing demand is outpacing supply as pandemic-fueled remote work encourages many homebuyers to relocate to more affordable parts of the country, while the number of homes for sale is at an all-time low. 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.
“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 Redfin Deputy Chief Economist Taylor Marr. “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. 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.”
Six of the top 10 metros where homes are selling for six figures above list price are in California. Los Angeles is followed by Oakland, where 580 homes sold for at least $100,000 over asking price at the beginning of this year. 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.
Los Angeles, even more than most other parts of the U.S., is grappling with a supply shortage—prompting buyers to pull out all of the stops to win. The number of homes for sale in Los Angeles dropped 29% year over year to an all-time low in January.
“On top of a lack of homes for sale, which makes everything a hot commodity, buyers are just plain eager,” said Los Angeles Redfin agent Sylva Khayalian. “They’re anxious to purchase a home ASAP because as rates rise, they won’t be able to afford the homes they’re looking at now and they’ll soon have to drop into a lower price range. People are willing to bid up home prices because they want to be done with their search.”
