The competition for real estate is staying hot in San Francisco. Between the start of the year and the end of May, 79% of single-family homes in the city sold for above the asking price due to low inventory, according to data from Sotheby’s International Realty.
In the same period, 9% of the single-family homes sold for their asking price and 12% sold for less than their asking price. Meanwhile, at the same time last year, 70% of homes sold for more than their asking price, according to the data.
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The analysis is based on the San Francisco Association of Realtors MLS closed sales data.
The over-bids are highlighted by one specific sale in the affluent Pacific Heights neighborhood at the start of May, according to the data. The Grand Victorian on Scott Street was asking $7.995 million when it hit the market in April, and changed hands for $9.6 million, a whopping 120% of its asking price, listing records show.
Noe Valley, meanwhile, has been the most competitive market in San Francisco this year. So far this year, 10 homes sold there for $500,000 or more above the asking price. In Bernal Heights, nine homes have sold this year for $500,000 or more over asking.
"The lack of inventory overall is the major contributing factor to homes selling over market," said Janet Feinberg Schindler of Sotheby’s International Realty, the listing broker of the Scott Street house.
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"Since 1969 there has been a 22% increase in population and San Francisco is only 47 square miles. We are the second most densely populated city in the country. It's simple supply and demand, there are more buyers than sellers."
One method for pushing up the value of offers is to purposefully set the listing price lower than expectations. While doing so is a "calculated risk" Ms. Schindler said, it can generate a bidding war.
Another important factor is having a desirable property. "This is typically a home in move-in condition in a style appreciated by buyers, or a home that is priced to enable the buyer to make changes," Ms. Schindler said.