LOS ANGELES — Just when you thought real estate couldn’t get any more bonkers, the percentage of Los Angeles homes selling for well above their initial list price is increasing.
In the second quarter of 2021, nearly twice as many LA homes sold for 30% or more above their initial asking price compared to the first quarter, according to a new analysis from the online real estate firm, Zillow.
Ninety-nine houses in the LA metro area sold for $500,000 or more over list, compared to 54 that did so in the first quarter and 27 in the second quarter a year ago. While .6% of LA homes sold for 30% or more above list in the first quarter of 2021, 1.1% did so in the second quarter.
“Many of our sellers are seeing over 60% of a return on their investment from purchases just several years ago, while our buyers are locking in lower interest rates than we've seen in decades,” said Jake Melendez, chief data officer at Active Realty.
The real estate seller’s market began to take off in the early days of the pandemic last year, when interest rates fell to historic lows. That set off a frenzy as buyers swarmed to take advantage of rates that lowered the cost of owning a home and gave them more buying power.
As of Tuesday, the average rate for a 30-year fixed-rate mortgage is 3.05%, or 2.31% for a 15-year fixed-rate loan, according to the financial services company, Bankrate.
San Francisco led the nation’s 50 largest metro areas in the share of homes sold for at least 30% over their list price in the second quarter. It also led the nation for the most homes sold for $500,000 or more over asking, followed by San Jose, Los Angeles, Seattle and Miami.
The Riverside metro area also saw significant gains in home sales for more than list. Three houses sold for $1 million or more over list in the second quarter. In the previous quarter, no home had sold for such a premium over asking. Similar to LA, twice as many homes are selling for 30% or more above first list in the second quarter compared with the previous three months.