In Los Angeles’ frenzied real estate market, making a full-price offer is generally not enough to stand out from the competition. Amid record-low inventory levels, buyer letters, all-cash offers and waived contingencies have become de rigueur.
A recent report from Redfin found that 54.8 percent of Los Angeles homes sold above the list price in the four weeks ending March 21st. That’s an 11.1 percent increase compared to the same period last year when 43.7 percent of properties fetched more than their asking price.
Real estate analyst Tim Ellis, who authored the report, noted that year-over-year comparisons may be skewed by the abrupt slowdown in market activity that occurred this time last year as stay-at-home orders were put in place. California’s first lockdown began on March 19, 2020, but the anxiety-ridden environment that existed in the days before could have also hampered home sales.
As of late-February 2021, the median sale price of a Los Angeles home amounted to $846,000, up 12.8 percent annually, according to Redfin data. During the same month in the previous year, the typical LA home sold for $750,000, a difference of $96,000.
Another Redfin report published last week indicated that 69.6 percent of home offers written by Redfin agents in Los Angeles faced bidding wars in February. The rate rose slightly over January 2021, when 69.1 percent of local Redfin agents encountered multiple offer scenarios.
This trend is playing out nationwide as inventory remains tight and home prices reach new heights. “It’s concerning how much home prices have risen during the pandemic,” said Redfin Chief Economist Daryl Fairweather. “When the pandemic is over, purchasing a home is going to cost much more than ever before, putting homeownership much further out of reach for many Americans.”
By Redfin’s estimate, almost 40 percent of US homes sold above asking in the last month, marking an all-time high. The median home-sale price surged 16 percent year-over-year to $331,590 — another record. As if that wasn’t troubling enough for first-time buyers, 60.9 percent of Redfin offers were met with competition in February, the tenth consecutive month that a majority of such properties attracted bidding wars.
While Los Angeles ranked tenth in terms of the share of homes that sold above list price last month, four other California markets recorded even higher percentages. These metros included San Jose (70.9 percent), Sacramento (65.4 percent), San Francisco (59.4 percent) and San Diego (56.6 percent).
Earning first place, the historically hot San Jose market has reportedly “recovered to pre-pandemic levels,” but Sacramento is experiencing unprecedented competition as remote workers from the Bay Area seek out more affordable housing options.
“At this point, we’re actually trying to reduce the number of offers on a home so we can respond to the serious offers that we do receive,” said Sacramento Redfin agent Andrea White.