Back in September, a modest ranch house sold in Sunnyvale for $782,000 over its asking price, signaling that the Bay Area housing market was even crazier than it seemed.
That sale was extreme: The buyer paid $2,470,000 for a four-bedroom, two-bath house — less than 2,000 square feet — that had listed for $1,688,000. But the deal turns out to have been an over-the-top version of what has become the new normal in the Bay Area, where home buyers are more likely to pay over-asking prices than anywhere else in the nation, according to a report from Zillow.
The analysis shows that 68.5% of the homes sold last year in the San Jose metropolitan area went for over the asking price. The median amount paid over the list price was $62,000, which translates as 6.8% above list. Those were the highest numbers in the county.
The San Francisco metropolitan area, which includes the East Bay, was close behind in second place: 64.5% of deals were for over asking and the median amount paid above the list price was $41,000, or 6% over list.
The low housing supply has become a national phenomenon, forcing home prices up almost everywhere. Between 2012 and 2017, the share of homes selling for above the asking price in the United States rose from 17.8% to 24.1%. The median amount paid over list last year was $7,000.
But in the nation's tech centers — most notably San Jose, San Francisco and Seattle — the trend has become acute.
"In the booming tech capitals of the California Bay Area and Pacific Northwest, paying above list price is now the norm," said Zillow senior economist Aaron Terrazas. "In the face of historically tight inventory, buyers have had to be more aggressive in their offers."
Over the past five years, the Seattle metro posted the largest increase in the share of homes that sold above asking, rising from 20.3% in 2012 to 52.4% in 2017.
In the San Jose metro area, the five-year jump was from 49.1% to 68.5%, while the share of over-asking deals jumped from 43% to 64.5% in the San Francisco metro during that same period.
As competition among buyers has increased in the Bay Area's core, the over-asking trend has also emerged in the region's fringes: Between 2012 and 2017, the share of over-asking sales rose from 34.6% to 41.2% in the Sacramento metro, where the median amount paid above the asking price last year was $9,000.
Given the combination of strong buyer demand and limited home supply here and nationally, Terrazas doesn't expect the over-asking situation to change much in the near future.
"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 said.
Tribune Content Agency