Share of homes that sold above list price dropped to a 7-year low

 

For those measuring the temperature of the metro Denver housing market last year, one of the surest signs things had cooled down was a drop in the number of properties that sold for above list price.

Nationally, the share of homes that sold above list price hit a three-year low of 19.9% in 2019, according to Zillow, the Seattle-based real estate portal. One in five homes managed to get a price above the original listing price, and when that happened, the average premium was $5,000.

“The housing market took a breather in 2019, after years of red-hot sellers’ markets,” said Zillow economist Jeff Tucker in comments accompanying the study.

In metro Denver, 23.8% of homes sold above list price in 2019, down from 34.3% a year earlier, and a high in 2015 of 41.1%.  That was the biggest miss for sellers since 2012, when only 17.7% of homes sold for above the list price.

Of the one in five homes that did go for more than the list price, the average premium was $6,100, down from $10,000 the year before, Zillow found.

“Many sellers were caught off-guard by the changing conditions, and ended up accepting offers at or below list prices that were dreamed up during the height of the frenzy,” Tucker said.

Back in 2012, the market was rebounding from the housing crash. Sellers were still competing with banks trying to unload foreclosed homes, and many simply were trying to cover the mortgage and avoid having to bring money to the closing table.

Last year, it appears sellers and their agents misjudged the toll that higher mortgage rates were having on buyers, especially in the first half of the year.  Even though they were sitting on a thick equity cushion, many wanted to squeeze as much as they could out of the market.

Starting out too high, however, often backfired, requiring sellers to cut the price and spent much more time on the market.

Zillow also sliced the numbers by home price. The lowest one-third of homes in metro Denver by price saw 31.2% of listings sell for a premium, while 25.2% of those in the middle tier did so. Only 18.3% of homes in the top third achieved a premium to the original list price.

“The Denver numbers are consistent with what we’re seeing nationally but more exaggerated,” said Zillow spokesman Alex Lacter.

At 16%, Castle Rock had the lowest share of homes selling for above list price last year of the areas that Zillow tracked.  Broomfield, Parker and Centennial were around 20% and Denver at 23.1%.

Buyers bid up prices the most in Westminster, which saw 29.3% of homes go for a premium to list price, followed by Lakewood, Thornton and Aurora.

That was 2019. Inventory has tightened again and buyers are chasing a more limited supply. Metro Denver’s inventory of homes available for sale at the end of January dropped below 5,000, despite a huge surge in new listings, and agents say they are seeing bidding wars return.

Article By  | [email protected] | The Denver Post