In some markets, rising home prices are being triggered by bidding wars. Home buyers in California are the most likely to face steep competition for properties, according to a new study by CoreLogic. Seventeen of the top 30 cities with multiple offers that pushed sale prices above the list price are in California; eight are in Washington.
The largest average increase over list price, on a percentage basis, was in San Francisco at 12.2 percent, followed by San Mateo, Calif., at 11 percent.
“Let us pause for a moment and think about this: if you happen to get into a bidding war in San Francisco CA, which actually occurred in six out of ten closed sales in Q2 2016, you’d better be prepared to pay an additional $134,000 for your dream home,” writes Bin He, CoreLogic’s principal economist, in the analysis for the company’s Insights Blog.
Bin He notes that tight inventories are triggering many of these bidding wars. In California and Washington, for example, the inventory is at a 2.6 month and 2.04 month supply, respectively. The rest of the country is at a 3.75 month supply.
Source: “Return of the Bidding War, But Only for Certain States,” Mortgage News Daily (Aug. 8, 2016)