The housing market is still slow in most of the country, but it’s heating up again in Silicon Valley.Earlier this month, we talked to a resident of Palo Alto who estimated selling prices have gone up 30 to 60 per cent in the last six months. His evidence was a “teardown” house that sold immediately for $2.1 million — more than half a million over asking price.
Then, over the weekend, the San Jose Mercury reported on a ranch house in Palo Alto that drew 38 bids. It finally closed at $1.65 million, well over the asking price of $1.2 million.
Some sellers are holding their homes off the market, anticipating prices will rise even more over the next year as the newly minted Facebook millionaires begin spending their money, the Mercury reported.
Another real estate agent told Bloomberg today that there’s a house there going for $3 million — more than the $2.57 million that the buyer paid near the housing market’s peak in 2007.
The San Francisco housing market seems to be hot now as well, especially at the low end — about half the houses listed under $1 million draw multiple bids and go for more than their asking prices, based on data shared by real estate agents over the last few months.
Bloomberg notes that these bidding wars are happening in other tech hotbeds like Seattle and Washington, D.C., as buyers gain confidence and suck up unsold inventory. Nationwide, inventory was at its lowest level since 2007, with only 2.43 million homes listed in February.
But outside these hotbeds, demand is still weak. The nationwide Case-Schiller index showed home prices down 3.8% in January from the previous year, and orders for new homes dropped 8 per cent in the quarter ending Feb. 29.