The Front Steps enjoyed a big Richmond sale this week, with bidding on 764 24th Avenue pushing the final sale price up to nearly $1 million more than the original asking price.
That kind of spillover is called “overbidding,” and often it’s interpreted as a symptom of a hot housing market. We say “often” because a few caveats have to come along with that statement, first being that although money may be the bottom line it’s not everything, and there are other, less flashy variables that may be just as important as price.
Also note that realtors and sellers like the attention that comes with bidding wars and can sometimes find ways to artificially induce overbids, say, by pricing a home low on purpose.
One way to compensate for that kind of distortion is through scale: So rather than one Richmond home sale, let’s look at all of them–that is to say, all of them for 2021 so far.
Since January 1, MLS recorded 302 closed home sales in the neighborhood (Lake Street included). Out of those, does the average Richmond home sell for more or less than what it asks for at the outset?
It probably won’t surprise you that the answer is more: The mean average listing price for a Richmond home this year so far was more than $1.76 million, while the mean closed price was over $1.96 million. That’s a difference of around 11.36 percent–not enormous, but big in statistical terms.
Median price is even more dramatic: From more than $1.57 million on day one to $1.78 million at close, a 13.37 percent spike. Now, what if we parse these figures and compare, say, single-family homes to condos?
Condo overbidding is pretty much exactly average for the neighborhood, around 13 percent (median). But for standalone homes that number shoots up to nearly 20 percent.
Why does this matter? Well, as we’ve mentioned in the past (and as you’ve no doubt observed for yourself), the Richmond does not have a huge condo supply; Planning Department estimates show that buildings with five or more units make up only about 25 percent of Outer Richmond housing stock.
The Inner Richmond has a higher percentage, around 43 percent, but keep in mind the inner neighborhood has only half as many homes in total, so this is still not a lot overall.
Point being, when we observe that the Richmond is an in-demand neighborhood and that people continue to pay top dollar and bid over each other to buy here, a big factor is structural: We don’t just have homes, we have a lot of the kinds of homes that people want the most–ie, single-family homes and duplexes in residential neighborhoods.
That’s one reason why when there’s, say, a pandemic-related downturn, demand remains more consistent: Even at the worst of times, some assets (and places) never go out of fashion.
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