Prices are juiced THIS often: It’s an age-old tactic: List a home below what the market will likely pay and that initial “bargain” creates a feeding frenzy. Will the same house hunter exuberance - and cheap money - exist when today’s buyers may want to sell in a few years? So buyers ignore the overall price tag and just scramble to make the monthly house payment. Sadly, one important byproduct of the interaction of those two economic forces - price - seems to be ignored as the market is dominated by FOMO (that’s “fear of missing out” to my non-hipster readers).īuyers are HOW crazy: The fairly utopian view that housing is a ticket to wealth has been amplified by historically low mortgage rates. It’s THIS hot: You know the ol’ supply vs. Still, I’ll let you pick why it’s a worrisome trend … On a scale of zero bubbles (no bubble here) to five bubbles (five-alarm warning) … FIVE BUBBLES! Lowest shares? Houston, New Orleans and San Antonio at 0.4% of sales. Other crazy-price towns? Buffalo (6.2% of sales) Austin (5.3%) Memphis (3.2%) and Seattle (3.1%). And if nothing else, that NorCal buying pattern hints at an end to whatever possible “exodus” may have occurred from the region in the pandemic era’s early days. Huge overpayments seem to be a Bay Area fad. Los Angeles-Orange County: 1.1% spring vs. San Francisco: 7.4% of all spring sales vs.
Let’s start with the national stats showing 1.4% of all spring sales were 30% above list, up from 0.9% in winter.
So Zillow’s research also peeked at how the homebuying binge forced house hunters to pay up with another metric: The share of all sales that sold for 30% or more above any list price. Another viewįolks who can afford $500,000-plus for a house - no less pay a half-million above a seller’s ask - are a rare breed in most of the nation. Million-plus misses? 90 in the spring vs. Million-plus? None.Īnd the rest of the nation? Spring saw 591 sales a half-million above ask - up 180% from winter. San Diego: 27 half-million above - up 80% from winter. Inland Empire: 10 half-million above - down 17% from winter. This was clearly a spring fling, and to be fair, it’s a timeframe during which house hunting traditionally intensifies. Let’s first break down the California metro results, comparing second-quarter overpayments with the previous quarter. Ponder the buying binge’s intensity among the upper crust this way: Six California metros accounted for 65% of all the half-million-above-asking-price sales nationwide and 44% of the deals where the listing price was too low by $1 million or more. Source: An analysis of sales prices compared with initial asking prices by Zillow, which tracks the nation’s 50 largest metropolitan areas. If you think that’s high, 96 sold for $1 million more than what sellers’ initially sought. “ Bubble Watch” digs into trends that may indicate economic and/or real estate market troubles ahead.īuzz: Homebuyers are so eager to join the pandemic era’s feeding frenzy that 1,368 California homes sold in the first half of 2021 at least $500,000 above the listing price.
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