The red-hot US housing market is widening the gap between what a home is objectively worth and what eager buyers are willing to pay for it. Fierce competition amid an ultra-low inventory of homes on the market is fueling bidding wars, prompting a growing share of would-be buyers to sweeten offers well above what sellers are asking, per the AP. Home prices have rocketed to new highs and many homes are selling for more than their appraised value. "This might be the most competitive housing market we’ve ever seen in the United States, at least in modern times," said Zillow senior economist Jeff Tucker. The share of US homes purchased above their list price has been steadily rising since early last year. An average of 20.3% of homes sold last year went for more than their list price, up from an average of 14.2% in 2019, according to Zillow's data.
In January and February of this year, an average of about 28% of homes sold above their list price. In February, some 54.4% of homes sold in San Francisco, 51.6% in Seattle, 42.1% in the metropolitan area spanning Los Angeles, Long Beach and Anaheim, went for more than advertised. The trend is also visible in less pricey housing markets. Some 41.2% of homes sold in February in Wichita, Kansas, went above the list price, as did 60.5% in Boise, Idaho, Zillow said. While sales of previously occupied US homes slowed in April for the third straight month, the US median home price surged 19.1% from a year earlier to a record $341,600, according to the National Association of Realtors, which found nearly 90% of homes sold were on the market for less than a month. In April, 19% of homes had their appraised value come in below the contract price, according to CoreLogic. (This home recently sold for $1 million over the list price.)