Although competition among homebuyers slowed down nationally in 2014, a solid majority of the offers received by Redfin, a real estate company, faced a bidding war, especially in California. Of course, San Francisco, home to Silicon Valley start-ups and the youthful tech industry, topped the list.
Although the share of homes that sold above list price fell to 19 percent from 24 percent, according to a recent Redfin report, the prices still indicated an enthusiastic market.
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WHY THIS MATTERS
With mortgage rates low, down payments at 3 percent, stock prices soaring and the wealth effect making people feel they’re richer than they really are, some think we’re heading for a another housing bubble.
Sunset District in San Francisco topped the list of the most competitive neighborhoods, with nine out of 10 homes selling for more than the asking price. Some other highly competitive neighborhoods in 2014 are located in San Jose, Oakland, Los Angeles and Seattle.
Redfin based its rankings on the percentage of offers that found competition and the percentage of homes that sold for more than their list price.
Here are the five neighborhoods with the fiercest bidding wars:
Sunset District - San Francisco. This neighborhood used to be one of last resort for homebuyers but good schools and relative affordability compared to the rest of the city are attracting new buyers. “Older residents who have paid off their homes are cashing in while new families and renters are moving in,” Redfin agent Derrick Lee said in the report. Median Sale Price: $955,000
Castro – San Francisco. Demand for real estate in the Castro, one of the most vibrant San Francisco neighborhoods dotted with shops and bars, is so strong that realtors often convince buyers to send competitive offers before an offer deadline in the hope that sellers accept it prior to reviewing all the other anticipated bids. Median Sale Price: $1.29 million
Bernal Heights – San Francisco. A good location for those commuting south to the Silicon Valley, Bernal also offers a variety of local cafes, boutiques, bar and parks. “Due to this draw, many Bernal properties are receiving multiple offers and some are selling for as much as 30 percent over their asking price,” said Redfin agent Miriam Westberg. Median Sale Price: $1.05 million
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Jamaica Plain – Boston. Competition somewhat abated in the fall in Jamaica Plain after the local market reached a tipping point with buyers becoming wary of overpaying. But the neighborhood, southwest of Boston, continues to attract many thanks to its green outdoor space, yoga studios, coffee shops and convenience of three local T stops. Median Sales Price: $457,000
Silver Lake – Los Angeles. More than 29 percent of offers in Silver Lake so far this year were all-cash offers, the highest of the top five most competitive neighborhoods. “Everyone wants to live in Silver Lake for several reasons,” said Earnest Watts, Redfin agent in Los Angeles, citing its convenient location near downtown and several freeways, green outdoor space and Ivanhoe, a highly rated public elementary school. Median Sale Price: $822,000
With the economy gaining momentum, the housing market is gearing up for an even stronger recovery in 2015. Low oil prices are likely to strengthen consumer confidence, which only means that even more neighborhoods will become competitive.
"Looking ahead to 2015, stronger economic fundamentals mean demand for housing is expected to increase," CoreLogic noted in its 2015 housing outlook published Monday, with overall home sales expected to grow 9 percent in 2015 to 5.8 million.
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