According to Zillow, nearly a quarter of U.S. homes (24 percent) sold in 2017 sold for almost $7,000 more than their asking prices. The number is up from 2013, when 17.8 percent of final sale prices were higher than the asking price.
Many of these high final sale prices are due to a growing demand and a decreasing supply of homes. “Young adult renters are increasingly feeling confident enough to buy, but they are entering a market with very few homes for sale, as inventory has been steadily declining for almost three years. Low interest rates have buoyed buyers’ budgets, raising the limits on what they can afford – and may be willing – to pay,” Builder Online said.
Homes sell in around 80 days on average, but in competitive markets like San Francisco, San Jose and Seattle, the average home is on the market in 50 days. Often, buyers spend around four months shopping for a home and must make multiple offers on a home before one is accepted, even if they are the only buyer. But when home supply is short and more buyers are available, the solution is to sell to the highest bidder, who is often helped out by the current low interest rates. Zillow’s senior economist, Aaron Terrazas, said, “Low interest rates and strong labor markets with high-paying jobs have allowed home buyers in some of the country’s priciest housing markets to bid well over asking price.”
Highly competitive markets, like San Francisco, have seen a tremendous growth in homes that sold for more than the asking price. In 2013, around 43 percent of homes sold for more than the asking price, but in 2017, that number has skyrocketed to 64.5 percent. Buyers, on average, end up paying around $41,000 more than the home’s original asking price.
In Atlanta, the numbers are not so extreme. From 2013’s 19.3 percent of homes selling for more than the asking price, 2017 only saw an increase to 19.6 percent, with most homes selling for $5,000 more than their asking prices.
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