If you’re looking to buy a house on the West Coast, good luck — more than two-thirds of the most competitive markets in the United States are in Washington and California, according to a new ranking from hi-tech brokerage Redfin.
Seattle, San Jose and Fremont, California, all tied for first place as the most competitive market in the country. In those cities, the problem of low inventory and high demand for properties has reached a point at which single-family homes sometimes sell at more than $100,000 above the asking price.
Not far behind, Oakland, California; Aurora, Colorado; and San Francisco all made the list of the most competitive cities in the U.S.
“Many of the most competitive cities are tech hubs that have attracted an influx of people moving to the area for jobs, unmatched by the creation of new homes,” said Taylor Marr, senior economist at Redfin, in a statement. “This has led to intense competition and rising home prices.”
Redfin determined its ranking of most and least competitive neighborhoods for homebuying using a new feature, the Redfin Compete Score, which rates each neighborhood and city on a 1 to 100 scale of competitiveness (higher is more competitive), based on four main factors:
- Average number of competing offers for properties in an area.
- Percent of offers where at least one contingency was waived (indicating a buyer was willing to sacrifice something, such as inspection, to make the offer more competitive to a seller).
- The ratio of homes that sell above their list price.
- The number of days on market (shorter means a more competitive market).
Redfin gets data from its own listings and from the multiple listing services of which it is a member.
The Redfin Compete score is rolling out today on all the brokerage’s listings. You can find the Redfin Compete Score for your own area here.
Not surprisingly, certain neighborhoods in the same cities had an even higher level of competition. The West Murphy neighborhood in Sunnyvale, California, and the Phinney Ridge neighborhood in Seattle — home to large numbers of employees from tech companies such as Apple, Google and Amazon — were two of the most competitive in the country.
“In San Francisco, Seattle and Denver, homes have become so expensive that many people are moving elsewhere in search of more affordable and less competitive housing markets,” Marr said.
“Even with the recent — and much needed — surge of inventory, desirable homes are under contract in five to seven days,” said Shoshana Godwin, a Redfin agent in Seattle, in a statement.
That said, other pockets of the country are actually struggling to find homebuyers. New Orleans, El Paso and Pittsburgh had three of the least competitive markets in the country — this means that there are more houses on the market than people looking to buy them.
More surprisingly, many luxury neighborhoods in Florida — for example, Ibis in West Palm Beach, Bayshore in Miami Beach, and Boca West in Boca Raton — came high on the list of the least competitive areas in the country.
“Since there’s a small pool of prospective buyers for high-priced homes, they tend to stay on the market longer and sell for less relative to their asking price than median-priced homes,” Marr said.
Such findings, according to Marr, show that the luxury of the neighborhood is not always the primary factor when it comes to driving sales — in general, people move to cities where they have a steady source of jobs.