A gradual decline in inventory has contributed to the increase in overbidding among buyers, according to a new report from Paragon Real Estate. The real-estate firm tallied the number of homes, co-ops, TICs, condos and even 2-4-unit buildings listed on the MLS, starting just before the market recovery began in 2012. It found that while listings consistently peak in the spring and autumn, and plummet around the December holidays, those peaks and valleys have been sinking lower and lower over the past few years.
The reduced inventory (as well as a widespread underpricing strategy by local realtors) has led motivated buyers to bid considerably over the asking price for the vast majority of S.F. sales. Paragon’s figures show that February 2015\0x2032s sales prices were an average of 8% higher than asking prices overall, with single-family homes selling for 12% over asking, condos averaging 7% over, and 2-4 unit buildings 2% over asking. “Houses are becoming a smaller and smaller percentage of city home sales (since virtually no new ones are being built), which has generally made them the most competitive market segment,” according to the report.
Now for some (slightly) good news for buyers: Paragon claims that even in this hot market a good 20%-30% of homes are price reduced before selling or are so overpriced they are removed from the market without a sale taking place. Now for more bad news: the less expensive the home, the bigger the buyer frenzy. “Right now, more affordable homes–for example, condos under $1 million–appear to be in particularly high demand,” according to the report.
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