MW How buyers are winning bidding wars in a market where homes are going for $620,000 over ask

By Aarthi Swaminathan

The spring home-buying season could be bruising in this region, where bidding wars are alive and well

When Danine Alati and Juan Parra made an offer on their first home in Verona, N.J., in 2021, they were among 18 buyers who submitted an offer. They won that bidding war, packed their bags and moved in.

Four years later, they were back on the market again, this time looking for a home in Park Slope in Brooklyn, N.Y. They weren't sure they could win another bidding war, but they still tried, offering $56,000 over the asking price. The strategy worked, and the couple got the house.

Alati and Parra's experience with two bidding wars during and after the COVID-19 pandemic offers a glimpse at the reality many home buyers in certain Northeast markets are facing. The Northeast is home to some of the most expensive real-estate markets in the U.S. - but even its steeper price tags and high mortgage rates haven't stopped buyers from going above and beyond with their offers.

Pandemic-era bidding wars, in other words, never truly went away in these markets, even as the U.S. real-estate market overall has been sluggish, with home sales dropping to a 30-year low in 2024.

During the pandemic, New York City homeowners and renters sought refuge in areas surrounding the city, buying up homes in pricey suburbs upstate or in Connecticut or New Jersey. These sales were partly fueled by ultralow mortgage rates.

Now buyers in the Northeast are back to looking in big cities as well, even with the 30-year rate at 7%. But they face an uphill battle.

"It's gotten worse because we have no inventory," Jennifer Leahy, a real-estate agent with Compass $(COMP)$ in Connecticut, told MarketWatch. Homeowners are reluctant to give up their ultralow rates and sell, which has locked up inventory. In January, there were about 6,900 homes for sale in Connecticut, down 13% year over year, according to data from the real-estate brokerage Redfin $(RDFN)$.

Home-buying demand continues to outpace the supply of homes even as mortgage rates have surged, making homeownership more expensive. In fact, 'it's gotten worse because we have no inventory.' Jennifer Leahy, a Connecticut-based real-estate agent

Even as supply has largely been stagnant in many Northeastern metropolitan areas, demand for homes has been rising steadily, real-estate agents say. Buyers who were waiting for home prices to fall over the last two years have finally caved, and that increased demand is driving up home prices, Leahy said.

"We had been in a seller's market with low inventory prior to COVID, and COVID only exacerbated it," Alex Fronduto, a Boston-based real-estate agent, told MarketWatch. In some eastern Massachusetts towns where he is active, there are no single-family homes for sale, he noted, and homes in those areas are still selling for higher than their listing prices.

Early data suggest home-buying activity in the Northeast was already beginning to heat up well before the spring home-buying season. The number of homes that went into contract in January inched up 0.3% from the previous month, making the Northeast the only region that saw an increase over that period, according to data from the National Association of Realtors.

So buyers in the region looking to purchase a home in the next few months should brace themselves for competition.

"There's a lot of room to the upside," Jeff Jackson, a Connecticut-based real-estate agent with Corcoran Centric Realty, told MarketWatch. But people in some markets "don't mess around," he added. "They just make bids and get the deal done."

Buyers are coming out of the woodwork despite high home prices

Home prices in the U.S. are at record highs, and the 30-year fixed-rate mortgage is double the rate it averaged during the pandemic. A typical single-family home in the U.S. now costs nearly $400,000, according to the National Association of Realtors.

The gross income required to comfortably afford a home with that price tag is about $106,000, if a buyer had the ability to offer a 20% down payment at current mortgage rates. That's significantly higher than the real median household income in the U.S., which is about $80,610, according to the U.S. Census Bureau.

The following chart from the Federal Reserve Bank of Atlanta shows just how big the gap has grown in recent years between the real median household income and the amount of money someone would need to make to spend no more than 30% of their annual income on housing, a common affordability benchmark.

The Northeast is not the priciest region in the U.S.: The median price of a home in the Northeast was $475,400 in January, making it the second-most expensive region after the West, where homes have a median price tag of $614,200.

But the Northeast is still one of the more competitive regions to buy a home.

Out of the 20 hottest real-estate markets in the U.S. - a ranking based on the number of page views per property and the number of days that listings remain on the market - the Northeast had the highest number of metro areas on the list in February, according to a monthly report by Realtor.com. (Realtor.com is operated by News Corp subsidiary Move Inc.; MarketWatch publisher Dow Jones is also a subsidiary of News Corp.)

Buyers have been "coming out of the woodwork," Sean Adu-Gyamfi, a New York City-based real-estate agent with Coldwell Banker Warburg, told MarketWatch.

"They've come to the conclusion that if they really do want to buy, now is going to be the best time" before the housing market heats up in the spring, Adu-Gyamfi said.

Home buyers are 'coming out of the woodwork' ahead of the spring home-buying season.Sean Adu-Gyamfi, a New York City-based real-estate agent

A house sold 'as is' went for $620,000 over ask in New Jersey

The home itself was ordinary. It was built in 1948 on a one-acre lot, with four bedrooms and a two-car garage. Sold "as is" - real-estate code for "the property needs some work" - the single-family home was put up as part of an estate sale. The owner had died at 100 years old.

Saritte Harel, the real-estate agent listing the house, knew she'd get multiple offers. After all, the home was in Short Hills, N.J., an upscale, trendy small town close enough to New York City. It was within walking distance from the local elementary school, and close to a train station that would bring commuters to Midtown Manhattan within 35 minutes.

What she didn't expect was the house getting 24 offers and going for $620,000 over the asking price after being on the market for seven days. The final sale price was $1.72 million for a home that would be torn down by a local family and rebuilt.

It was still a great price: The median sale price in the town was $2.5 million as of January, per Redfin data.

"It was the kind of house that appealed to everybody," Harel, who is with Keller Williams Realty, told MarketWatch.

While 24 offers on a property is atypical, it is normal for homes in that market to receive multiple offers, Harel said. Another home she had listed in Short Hills for about $1.9 million, which is currently under contract, elicited 100 tours and nine offers.

Harel's experience with intense demand highlights one fundamental problem with typically hot Northeastern markets: They are supply constrained. "These are places where you probably have a lot of single-family zoning; it's very hard to build new construction," Chen Zhao, head of economics research at Redfin, told MarketWatch.

The home-buying frenzy shifted from the West Coast to the East Coast

Zhao's analysis of real-estate transactions, which included final sale prices compared with listed prices, revealed that the home-buying frenzy has shifted from the West Coast to the East Coast over the last five years.

In January 2020, the three metro areas where homes' sales prices most exceeded their asking prices were San Francisco and Oakland, Calif., followed by Tacoma, Wash. In January 2024, those three metro areas were Rochester, N.Y., Newark, N.J., and Hartford, Conn.

The following chart shows the top 10 metro areas where the average sale price most exceeded the list price, as well as the average sale price as a percentage of the list price, according to Redfin:

   Rochester, N.Y.      107.17% 
   Newark, N.J.         102.54% 
   Hartford, Conn.      102.45% 
   Buffalo, N.Y.        102.19% 
   San Jose, Calif.     102.12% 
   Oakland, Calif.      101.48% 
   Bridgeport, Conn.    100.72% 
   New Haven, Conn.     100.67% 
   Nassau County, N.Y.  100.55% 
   Camden, N.J.         100.53% 

A Connecticut house that went for $1 million over the asking price

How does a home buyer in the Northeast win a bidding war this spring? One common piece of advice from real-estate agents is to offer the seller some flexibility on their move-out date.

A six-bedroom, 7,235-square-foot single-family home in Greenwich, Conn., was already a luxury property when it hit the market with an asking price of $5.25 million. Built in 2011, it had an entrance hall with herringbone floors, a gym, and a wine cellar that could hold over 300 bottles.

But when buyers submitted their offers for the home last May, the listing agent knew he had hit the mark. The agent and his team had deliberately priced it a little less than what they thought it would go for. The home got seven bids and later closed for $1 million over ask.

"My seller was looking for a very specific closing date," said Jackson, the Connecticut agent with Corcoran Centric Realty. "That's what mattered for them - that we get this exact closing date with the terms that [they] wanted, which was no contingencies, no availability to move the date ... which was highly unusual."

As a buyer, compromising with a seller who has such needs could help secure the home.

Advice from real-estate pros on how to win a bidding war

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March 08, 2025 06:00 ET (11:00 GMT)

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