After some years reflecting intense bidding wars in a majority of the markets, housing returned to a more normal atmosphere with the smallest share of homes selling for above their listed prices last year, according to Zillow.
The prices demonstrated a drop not seen since 2016.
Home value growth slowed throughout 2019 to a rate more in line with historic norms. About a fifth (19.9 percent) of homes sold for more than their asking price in 2019, according to a new Zillow analysis, down from 21.5 percent the previous year.
This drop breaks a streak of four consecutive years in which a greater share of homes sold above list price as the market picked up steam.
But inventory is incredibly tight and this scarcity is a main driver of bidding wars that drive up sale prices, so we could be headed for a reversal in 2020, Zillow reported.
Zillow said that's good news for prospective sellers, but means buyers will need to be on the ball this shopping season. Monthly trends in 2019 showed that the share of homes sold above list were greater in the fall months right as inventory was approaching its low point.
“The housing market took a breather in 2019, after years of red-hot sellers’ markets,” Zillow Economist Jeff Tucker said in the analysis. “Many sellers were caught off-guard by the changing conditions, and ended up accepting offers at or below list prices that were dreamed up during the height of the frenzy.
“But the cloudy outlook for sellers began to clear late in the year after inventory buildups in several cities were whittled back down to record lows, suggesting a hot spring sellers' market is around the corner. Sellers hoping to cash in and upgrade should proceed with care, however, as the same tight conditions that may drive up their sale price will be facing them on the other side when they look to buy their next home,” Tucker added.
Despite seeing recent year-over-year drops in home value, San Francisco (48.6 percent of homes sold above list) and San Jose, Calif., (38.8 percent) top the list of metros with the greatest share of homes sold above list among the top 35. Boston (34.7 percent), Minneapolis-St. Paul (34.3 percent) and Seattle (31.2 percent) have the next-highest shares.
The coolest top-35 markets were Miami (8.9 percent of homes sold above asking), Las Vegas (12.6 percent) and Tampa, Fla., (13.3 percent).
The median amount above asking that sellers realized, Zillow said, was $5,100, down from $5,500 in 2018 and the lowest since at least 2011.