If you’re still holding out hope that the following chart is anything but another massive housing bubble in the making then you should probably ignore the disturbing evidence to the contrary that we’re about to present below…
Back in 2005/2006, one of the key signs that housing markets across the country were overheating was the number of houses that, thanks to soaring demand from speculators, were suddenly selling at prices well in excess of their asking price. That said, as a local CBS affiliate in San Francisco points out, the premiums of 2005/2006 pale in comparison to homes in Silicon Valley today that are selling for as much as $1-$2 million over their original asking prices.
But if you thought they area housing market couldn’t get any more outrageous, consider a home on Colorado Avenue in Palo Alto.
It listed for $2.9 million, but sold for $3.9 million, $1 million over asking price.
Another home on Anacapa Drive in the Los Altos hills listed for $2.8 million, but sold for $4.5 million. That is $1.67 million over asking.
Finally, there is this home on University Avenue in Los Altos that listed at $7.9 million, but sold for $1.8 million over asking.
In 2017, 10 homes in the mid-Peninsula area sold for $1 million over asking. Six of those listings belonged to Deleon Realty.
But, lest you’re worried that the U.S. financial system is at risk of collapsing again for the second time in under a decade courtesy of another housing bubble, realtor Mike Repka of Deleon Realty would like to assure you that paying $2 million over asking price for a home in Silicon Valley is no more excessive than dropping an extra $100 on that silent charity auction for your kid’s basketball team. “Anyone who’s been to a charity auction knows they get caught up and they say they’re going to stop at a certain point, and they raise that paddle one or two last times,” said Repka. “When you have 12 people doing that it can make a real difference.”
That said, Lan Bowling with competing realtor Keller Williams in Silicon Valley has a slightly different, if somewhat more boring, take on how to price homes saying her own “personal philosophy is to simply price homes what they’re worth”…which is a genius plan if we understand it correctly.
Of course, until everyone in Silicon Valley comes around to Bowling’s way of thinking, we suspect residents earning less than $500k per year are going be living out of their late-90’s era recreational vehicles for a bit longer…