Strong Buyer Competition is Pushing Homes to Sell Above List Price

Rhea-AI Summary

According to a recent Zillow analysis, the share of homes sold above their listing price reached 22.4% in September 2020, marking an increase from 20.2% in August and a significant rise compared to around 15% in September of 2018 and 2019. This trend indicates a robust housing market, driven by intense buyer demand, a 37.4% drop in inventory year-over-year, and homes selling 17 days faster than last year. The ongoing demand is attributed to low mortgage rates and shifting housing needs, suggesting a competitive market likely to persist into 2021.

Positive

• 22.4% of homes sold above list price in September, up from 20.2% in August.
• Inventory levels decreased by 37.4% year-over-year, indicating strong demand.
• Homes are selling 17 days faster than the previous year, highlighting market competitiveness.

Negative

• None.

SEATTLE, Nov. 12, 2020 /PRNewswire/ -- In more evidence that persistent buyer demand is pushing a strong housing market deeper into the year than usual, a new Zillow® analysis finds the share of homes sold above list continues to rise, blowing past the typical mid-summer peak. That is great news for prospective sellers who want to maximize their return from a potential home sale. 

In September, 22.4% of homes purchased in the U.S. were sold for more than their initial list price, up from 20.2% in August and well above the roughly 15% of homes that did so during September 2018 and 2019. It is highly unusual for the share of homes sold above list to continue rising this late in the year. In both 2018 and 2019, the share peaked in July during the height of the typical home shopping season before steadily declining as the market cooled in the fall and winter months. This year, the share has increased each month.

Buyer demand has been intense and persistent since the market picked up speed in April after a dramatic slowdown in the early days of the coronavirus pandemic. Potential buyers may be feeling urgency to lock in low mortgage rates now, especially if they sense prices will slip further from reach in coming years. Many others may be taking advantage of new freedom to telecommute from an area where they can more easily afford a home. 

Whatever the reason, strong demand is helping to keep a lid on inventory as homes are being snatched up faster than sellers are listing them. Inventory has continued to fall compared to last year -- down 37.4% year over year at the end of October -- even as new listings have returned near last year's level, an indication of heavy sales volume. Homes were typically selling after only 12 days, a full 17 days faster than the same time last year[i]. Those market dynamics are likely pushing buyers to make offers above list price as they expect quick sales and competition from other buyers while choices are limited. 

"The housing market is taking us all back to Economics 101 and teaching lessons about supply and demand," said Zillow senior economist Chris Glynn. "A persistent interest in buying and moving is creating an imbalance that is driving prices higher than we typically see at this time of year. In many cases, buyers in this market should be realistic about the chance of bidding wars and leave themselves financial flexibility by looking at homes listed for less than their maximum price point.  With tight inventory, low interest rates, and robust demand from households re-evaluating their housing needs, a strong, competitive market with many transactions is likely here to stay into 2021." 

Bidding wars have been most common for homes priced just above and below the typical U.S. home value of $259,906. Homes priced in the second quintile of all U.S. home listings -- between $192,001 and $264,000 -- sold above list in 28.2% of September sales. Homes in this price range are also selling incredibly quickly -- a recent Zillow analysis of time on market found similarly priced homes typically sold faster than any other price tier in September. 

Homes priced in the most-expensive tier -- above $487,000 -- sold above list 15.7% of the time, the lowest of the five price bands tracked in Zillow's study. Still, this is the highest share sold above list in this price range in any month since at least January 2018, the earliest month included in the analysis.

Perhaps unsurprisingly, homes that sold in the shortest amount of time -- indicative of more-intense competition for these properties -- were more likely to sell above list. Of homes that have sold in 10 days or less since 2018, 28.5% sold above list. The longer homes stayed on the market, the less likely they were to sell above list. Even still, about 10.4% of homes during that time that stayed on the market for 60 days or longer before selling went for higher than their list price. 

The share of homes sold above list is up from last month and higher than a year ago in each of the 50 largest U.S. metros, and has more than doubled in five of the top 50: Phoenix, San Diego, Denver, Virginia Beach and Riverside. 

In today's competitive housing market, rushing into a home that's not the best fit and paying more than they can afford are two of the biggest risks that buyers face. Zillow experts recommend making a list of top criteria and trade-offs they're willing to make, using virtual or 3D Home tours to narrow down your options more quickly than waiting for a showing, and shopping for homes below a buyer's maximum price point to leave flexibility in case of a bidding war. A trusted local agent can help discuss trade-offs that may be necessary in a given market and help buyers understand what makes a winning offer in their area. 

Metropolitan Area	Sold Above List: All Homes (Sept. 2020)	Sold Above List: Bottom Fifth	Sold Above List: Lower- Middle Fifth	Sold Above List: Middle Fifth	Sold Above List: Upper- Middle Fifth	Sold Above List: Top Fifth
United States	22.4%	20.6%	28.2%	25.9%	21.8%	15.7%
New York, NY	21.9%	21.1%	27.1%	25.8%	19.8%	15.8%
Los Angeles, CA	33.0%	36.1%	38.9%	37.3%	32.0%	20.4%
Chicago, IL	14.1%	15.8%	19.7%	15.8%	11.4%	7.8%
Dallas-Fort Worth, TX	19.5%	25.0%	24.3%	19.5%	16.8%	11.9%
Philadelphia, PA	27.6%	21.2%	29.5%	32.5%	32.2%	22.6%
Houston, TX	12.1%	16.8%	15.5%	11.2%	9.2%	7.6%
Washington, DC	35.8%	31.3%	38.0%	42.2%	36.7%	30.6%
Miami-Fort Lauderdale, FL	7.8%	5.1%	9.5%	10.7%	10.0%	4.0%
Atlanta, GA	20.3%	24.5%	27.4%	22.2%	15.9%	11.5%
Boston, MA	40.1%	40.2%	47.3%	45.1%	39.7%	28.1%
San Francisco, CA	48.9%	45.3%	51.3%	51.1%	53.4%	43.2%
Detroit, MI	25.2%	20.1%	34.4%	30.7%	25.0%	15.5%
Riverside, CA	33.4%	27.6%	37.0%	42.7%	37.2%	22.6%
Phoenix, AZ	27.9%	31.7%	35.8%	32.3%	26.1%	13.4%
Seattle, WA	43.6%	49.3%	52.1%	40.9%	39.3%	36.2%
Minneapolis-St. Paul, MN	41.1%	42.3%	53.9%	50.2%	37.9%	21.4%
San Diego, CA	34.4%	36.6%	42.9%	40.8%	32.3%	19.1%
St. Louis, MO	32.3%	21.1%	38.4%	42.7%	34.3%	24.9%
Tampa, FL	15.3%	13.1%	18.0%	19.5%	15.3%	10.8%
Baltimore, MD	29.7%	22.8%	35.1%	35.1%	35.5%	19.8%
Denver, CO	30.3%	27.0%	44.3%	37.1%	24.3%	19.1%
Pittsburgh, PA	24.2%	19.0%	30.1%	30.8%	24.5%	16.9%
Portland, OR	37.0%	36.3%	46.3%	42.9%	35.3%	24.0%
Charlotte, NC	23.4%	27.7%	29.9%	23.6%	19.2%	16.4%
Sacramento, CA	35.3%	36.2%	45.3%	38.2%	32.0%	24.8%
San Antonio, TX	17.9%	23.0%	23.5%	17.1%	14.3%	11.7%
Orlando, FL	12.1%	10.7%	15.0%	15.4%	10.7%	8.6%
Cincinnati, OH	29.5%	31.0%	42.3%	35.2%	25.4%	13.5%
Cleveland, OH	31.6%	23.9%	38.1%	43.0%	33.5%	19.2%
Kansas City, MO	38.4%	37.5%	50.9%	48.6%	32.2%	22.7%
Las Vegas, NV	11.1%	9.0%	14.6%	12.5%	10.8%	8.4%
Columbus, OH	41.4%	40.1%	52.9%	49.3%	40.7%	23.7%
Indianapolis, IN	27.3%	27.9%	42.5%	31.5%	20.7%	13.7%
San Jose, CA	43.1%	27.2%	44.4%	46.8%	52.1%	45.2%
Austin, TX	27.4%	24.4%	28.7%	28.8%	30.6%	24.5%
Virginia Beach, VA	22.2%	22.4%	25.8%	27.5%	20.8%	14.6%
Nashville, TN	19.5%	22.6%	22.8%	18.4%	18.4%	15.3%
Providence, RI	35.5%	34.1%	44.4%	43.3%	37.1%	18.8%
Milwaukee, WI	44.2%	29.3%	51.7%	55.6%	47.5%	36.8%
Jacksonville, FL	12.1%	12.1%	16.4%	13.2%	10.1%	7.7%
Memphis, TN	34.9%	25.6%	44.1%	48.8%	33.7%	22.5%
Oklahoma City, OK	19.3%	26.1%	28.2%	17.2%	16.0%	8.9%
Louisville, KY	25.8%	23.6%	37.4%	32.8%	21.6%	13.6%
Hartford, CT	29.6%	27.7%	38.1%	33.6%	28.1%	20.5%
Richmond, VA	31.8%	33.0%	40.2%	32.9%	29.9%	23.0%
New Orleans, LA	14.3%	15.2%	24.0%	13.9%	13.5%	5.0%
Buffalo, NY	46.3%	32.4%	60.4%	57.3%	50.3%	30.9%
Raleigh, NC	27.8%	38.9%	29.9%	26.8%	23.7%	19.5%
Birmingham, AL	25.4%	23.7%	32.7%	26.8%	24.6%	19.2%
Salt Lake City, UT	37.8%	41.6%	43.0%	46.0%	35.4%	23.2%

*Table ordered by market size 

About Zillow Group

Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life's next chapter. 

As the most-visited real estate website in the U.S., Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting or financing with transparency and nearly seamless end-to-end service. Zillow Offers® buys and sells homes directly in dozens of markets across the country, allowing sellers control over their timeline. Zillow Home Loans™, our affiliate lender, provides our customers with an easy option to get pre-approved and secure financing for their next home purchase. Zillow recently launched Zillow Homes, Inc., a licensed brokerage entity, to streamline Zillow Offers transactions. 

Zillow Group's affiliates and subsidiaries include Zillow®, Zillow Offers®, Zillow Premier Agent®, Zillow Home Loans™, Zillow Closing Services™, Zillow Homes, Inc., Trulia®, Out East®, StreetEasy® and HotPads®. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org). 

[i] Zillow Weekly Market Report, Nov. 5, 2020: https://www.zillow.com/research/zillow-weekly-market-report-27151/

 

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SOURCE Zillow

FAQ

What does the Zillow analysis report about homes sold above list price for September 2020?

The Zillow analysis reports that 22.4% of homes sold above list price in September 2020, an increase from 20.2% in August.

How has inventory changed in the housing market according to Zillow?

Zillow indicates that inventory has fallen 37.4% year-over-year as of the end of October 2020.

What factors are driving the current housing market trends?

Factors include low mortgage rates, intense buyer demand, and changing housing needs due to telecommuting.

How quickly are homes selling in the current market?

Homes are selling 17 days faster than the same time last year, indicating increased market activity.

Is the competitive housing market expected to continue into 2021?

Yes, the strong demand and low inventory suggest the competitive housing market will likely persist into 2021.