Nationwide, the number of homes subject to bidding wars is increasing as the spring buying season gets underway. Some 61% of offers written by Redfin agents faced competition from other buyers in March.
This is up a massive 57% compared to February but is slightly lower than the 63% registered in March last year. However it’s important to note these figures are for nationwide and it’s quite a different story when comparing two of California’s housing markets, particularly as these are undoubtedly the nation’s hottest housing markets.
Markets in Ventura County and San Francisco bucked this trend with bidding wars reaching even higher than last year. In Ventura the bidding war percentage is one of the lowest in California but is important as it is one of the fastest growing, increasing from 33% in 2014 to 54% this year. Some 19% of homes sell for more than the listing price. In San Francisco bidding wars were at 88% last year, rising to 94% this year. Nearly a third of homes are selling for above the asking price.
The article in HousingWire looks at how this affects first-time buyers. Real estate experts have pointed out the solution is obvious as they simply have to save more, however difficult this might be. There is no indication that the market in California will be changing anytime soon and buyers hoping to purchase in the area need to try to adapt.
This is because the Bay Area has a lot of money that is driving prices upwards and there is no new supply coming onto the market. The most desirable areas are already fully built and cash-rich buyers are competing for the same properties. Often these buyers have so much money that they don’t need to worry about whether the price is over the top. The real estate market in Ventura doesn’t usually see these types of bidding wars, but it is a coastal community and only property on the coast has added value.
The real estate market in San Francisco is being fueled by the tech industry which is continuing to grow. As a result people can afford more expensive homes and builders are choosing to construct more luxurious properties. In addition, builders want to get the most value for each new build as it is expensive to construct new homes in California. This situation is only likely to change if the tech bubble starts being so overinflated, resulting in the market cooling down.