Redfin: More homebuyers in the U.S. are paying $100,000 above the asking price

Homebuyers in the United States are paying extra due to limited inventory and rising mortgage rates. Nearly 6,000 homes have been sold for $100,000 and more above the asking price at the beginning of this year, Redfin reports. At the same time last year, this number was only 2,400, nearly three times less than now. 

Growing demand and strained supply make the competition even tougher for homebuyers in hot housing markets. The data provided by Redfin show that Los Angeles, San Francisco, and New York are among the cities with the highest number of homes sold for at least $100,000 above the asking price. For example, in 2021, 273 homes in Los Angeles were sold for six figures or more over the asking price. A year later, this figure nearly tripled and reached 718.  

“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 Taylor Marr, Redfin Deputy Chief Economist.  

“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.”

In February, the median asking price for an American home hit an all-time high and reached almost $400,000, CBS reports. This number represents a 13 percent increase from last year and a 27 percent jump from February 2020. Home prices are rising, and so is the competition among potential buyers. Another report shows that 70 percent of home offers written by Redfin agents received at least one competing bid. 

If you are on the market for a home but do not wish to engage in bidding wars, it is best to look towards areas that show lower competition rates. According to Redfin, metro areas that experience less competition include Cincinnati, Milwaukee, Detroit, Pittsburgh, and Indianapolis. 

Resources:

“Home Sales $100K Above Ask Soaring Amid Supply, Rates: Redfin,” by Holden Walter-Warner (The Real Deal, 2022)

“Home Bidding Wars Hit Record High in January: Redfin,” by Holden Walter-Warner (The Real Deal, 2022)

“Nearly 6,000 U.S. Homes Have Sold For $100,000+ Above Asking Price This Year,” by Dana Anderson (Redfin News, 2022)

“January Was the Most Competitive Month on Record for Homebuyers,” by Lily Katz (Redfin News, 2022)

“Asking price for a typical U.S. home nears $400,000, up 13% in just one year,” by Aimee Picchi (CBS News, 2022)