Top 5 cities for selling a home

Where home sales are taking off now

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By AnnaMaria Andriotis

Homes that sell in just a few days. Bidding wars. Above asking-price offers. They may sound like relics of the pre-housing-bust era, but for many homeowners, they’re a reality marking the beginning of a new seller’s market.

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Existing single-family-home sales increased 9.1% in January from a year prior to a seasonally adjusted annual rate of 4.92 million units, according to data released Thursday by the National Association of Realtors. Median sales prices hit $173,600, up 12.3% from a year prior—marking the 11th consecutive month of year-over-year price increases.
Other conditions are also working to sellers’ advantage. The number of homes for sale is declining. Roughly 1.47 million properties nationwide were listed on the multiple listing services, the databases where listing agents maintain their postings, in January, down 16.5% from a year prior, according to Realtor.com. With fewer homes to choose from, more buyers are engaging in bidding wars that often push the purchase price of the home above the asking price. Homeowners are also spending less time trying to sell: Homes were on the market for a median 108 days in January, down 9% from a year prior, according to Realtor.com. The data suggests that sellers are beginning to gain more leverage. “It’s a fairly broad-based phenomenon,” says Stuart Gabriel, director of the Ziman Center for Real Estate at the University of California, Los Angeles.
After waiting on the sidelines for years, would-be sellers in some markets are encountering favorable conditions. In particular, homeowners in markets that were hit hardest by the downturn, including Arizona, California and Florida, are seeing some of the biggest gains. For instance, the median sales price of existing single-family homes in Miami was $213,000 during the fourth quarter of 2012, up 15% from a year prior, according to the NAR. In Sacramento, median prices hit $193,200, up 18% from a year prior.
Sellers in such markets aren’t likely to unload their home at prices that surpass the boom years, but they have a shot at getting higher offers from buyers than they would have one or two years ago. For some owners, recent price gains may provide an opportunity to sell a home that they previously were underwater on, where they owed more money on their mortgage than it was worth. Roughly 1.4 million borrowers returned to “positive equity” during the first three quarters of 2012, according to the latest data from CoreLogic.
There are already signs that sellers are trying to make the most of the latest wave of buyer demand. Median asking prices in some markets, including Phoenix and San Francisco, were up more than 20% in January from a year ago, according to Realtor.com. And experts say more sellers will probably list their properties this coming spring (a peak season for home purchases).
Here are five cities where it pays to be a home seller.

San Francisco

Shutterstock.com

• Median list price: $729,000 as of January, up 23.7% from a year prior

Sellers in this market are receiving multiple offers on their homes, often from 10 or more interested buyers, says Bryan Sweeley, a broker in Silicon Valley with ZipRealty. Not only do homes sell quickly — median number of days on the market was 56 in January compared with 108 nationally, according to Realtor.com — but they often sell for more than the asking price, he says.
Sellers are also benefiting from a booming job market driven largely by the tech sector. As companies hire more employees, many of those new recruits end up buying real estate. That’s partly why inventory continues to dwindle: There were fewer than 1,900 homes for sale in January, down 47% from a year ago, according to Realtor.com.
Home sales in other large cities in California, including Sacramento and San Jose, are also taking off. In general, the state is benefiting from foreign buyers. California ranks as one of the top four states for international buyers (they account for 11% of sales), according to the NAR. Besides pushing up prices, many of these buyers pay all cash, which means a seller doesn’t have to wait for a bank to approve a buyer’s mortgage in order to unload their home.

Phoenix-Mesa

Downtown Phoenix

• Median list price: $209,500, up 23.6%

Homeowners in one of the hardest-hit cities are finally seeing some relief. Purchase prices are on the rise, suggesting that home values are improving and helping to bring more homeowners out of negative equity. The median sales price of existing single-family homes was $159,100 at the end of the 2012, up 14% from 2010, according to the NAR. For homeowners who were previously unable to sell their home, rising values could be their ticket out.
They’ll also find their listing won’t linger for long. For-sale homes were on the market for a median of 58 days in January, down 16% from a year prior, according to Realtor.com. Some buyer demand is coming from a surprising source: Individuals who went through a short sale — when a property sells for less than the owner owes the lender — when the housing downturn first kicked in are returning to the market in an attempt to once again become homeowners, says Dawn McKinley, a real estate agent with Thompson’s Realty Group at eXp Realty in Phoenix.
Still, sellers should remain cautious, she says. If they’re planning to use the proceeds from their home’s sale to purchase another property, they’ll need to consider whether the recent price gains are sustainable. Otherwise, if prices should drop, they could be left underwater once again.

Washington, D.C.

Washington D.C.

• Median list price: $429,900, up 16.3%

Demand for housing in the U.S. capital is coming from all types of buyers. They include first timers who now have the opportunity to lock in a mortgage with lower monthly payments than what they’d pay in rent, says Mehmet Halici, associate broker with Weichert Realtors in Bethesda, Md. There’s also an influx of foreign buyers and investors — many of whom pay all cash.
Collectively, these buyers represent an opportunity for sellers — even those who bought recently — to unload their home while making a profit. The median sales price of a single-family home in the metro area was $353,000 during the fourth quarter of 2012, up 13% from a year prior, according to the NAR. The best offers, says Halici, are made to sellers within close proximity to the district itself, where inventory is also at an all-time low.

Seattle-Bellevue-Everett

Seattle / Shutterstock

• Median list price: $349,000, up 16.4%

Homes are flying off the market in Seattle. Listed properties spent a median of 56 days on the market as of January, down 38% from a year ago, according to Realtor.com. That’s almost half the median time homes are listed nationally. Many sellers receive decent offers even earlier, but because multiple offers have become commonplace, real estate agents are encouraging sellers to keep their homes listed to see if any better offers will come in, says Bree Al-Rashid, a real estate broker with Redfin in Seattle.
The strategy can work to sellers’ advantage since buyers have been left with a smaller number of homes to bid on, which in turn encourages multiple offers on properties that can push the purchase price higher than the asking price, experts say. There were fewer than 4,000 homes for sale in the Seattle metro area as of January, down 44% from a year prior, according to Realtor.com. That’s created a sense of urgency among buyers. “If inventory was more normal, [they’d] be feeling less frantic,” says Al-Rashid.

Iowa City

The University of Iowa in Iowa City / Shutterstock

• Median list price: $224,900, up 12.5%

Unlike many markets in the Sunbelt region, Iowa City didn’t experience a big boom or bust. A steady job market — largely made up of the education and medical sectors that have been relatively unharmed by the recession — has made owning a home a reality for more residents. Iowa’s unemployment rate is among the lowest in the country (3.6% in December 2012, down from 4.2% a year prior), and it’s less than half the national average, according to the Bureau of Labor Statistics.
Demand for housing has resulted in a dwindling inventory: There were fewer than 700 homes for sale in January, down 10% from a month prior and down 4% from a year prior, according to Realtor.com. Julie Mohr, a broker associate with Coldwell Banker Real Estate Professionals in Iowa City, says the number of homes for sale has been down in almost every price range for the past 18 months and that there’s a limited number of properties for buyers to consider. “We are feeling the pinch,” she says.
For sellers, however, the conditions bode well. Sellers won’t have only first-time or move-up buyers to choose from; they might also receive offers from investors — who’ve been buying homes in larger numbers, says Mohr.