Would you consider paying an eye-popping $20,000 extra for a house already listed at over a million dollars, simply because it was the scene of a murder? This intriguing situation recently came to light in Santa Clara, California, where a Google engineer sold a home for $2.1 million just months after he killed his wife on the premises.

Although an additional $20,000 may seem extravagant, it underscores a broader issue: the housing shortage currently gripping the United States. Today, virtually every property attracts multiple offers, many surpassing the asking price by significant margins.

Timing is also essential in this equation. During the low-interest environment of the COVID-19 pandemic, fierce bidding wars drove home prices far beyond what sellers had anticipated.

Hannah Jones, a senior economic analyst at realtor.com, noted that May 2022 saw the highest levels of U.S. home sales exceeding asking prices, with homes generally selling for 3.1% above their list prices. However, with rising interest rates, that trend has reversed. Jones points out that since August 2022, typical home prices have been falling short of listing prices, and by the first half of 2024, average selling prices were 1.9% below the original asking prices.

Despite the changing market dynamics, Santa Clara’s high-priced crime scene illustrates that some housing markets remain fiercely competitive.

Realtor.com evaluated sale prices in comparison to listing prices across the 75 largest metropolitan areas in the U.S., discovering that the regions where homes commonly sell for more than their list prices are concentrated mainly in the Northeast and West. The Bay Area, which includes San Jose and San Francisco, stands out for its competitiveness, often requiring attractive offers to outpace rival buyers.

San Jose, in particular, ranks as the metropolitan area with the highest average sale price above the list price, at 6.2%.

Brad Gill, a real estate agent with over two decades of experience in San Jose, emphasizes that the local market is highly seasonal. Limited inventory in the first quarter of the year leads to intensified competition. Furthermore, rising interest rates and homeowners stuck with lower mortgage rates have contributed to fewer properties being available for sale.

However, Gill adds that while homes in cities like San Jose frequently sell for above asking prices, many do not exceed their market value. Often, properties are listed approximately 3% to 5% below their market appraisal to boost competitiveness.

Among the top 10 metropolitan areas where sale prices surpass listing prices, seven have median home prices below $500,000.

Three of these cities are in Connecticut, which Jones attributes to buyers seeking commutable locations to New York City or Boston, especially as many employers have started requiring their staff to return to the office a few days a week.

Jones highlights that this year, the Northeast has experienced the most notable instances of homes selling for more than their list prices, as buyers rush to secure superior locations within commuting distance. Faced with limited inventory and fierce competition, buyers are compelled to present their best offers in this challenging housing market.