Nearly half of offers written by Redfin agents for their clients faced competition in May, with buyers re-emerging as the nation’s housing recovery from COVID-19 begins.
In May, 49.4% of Redfin offers faced competition, up from 43.9% in April. And such bidding wars are likely to recur as the shortage in for-sale inventory persists, with the number of listings on the market in May 18.9% lower than the same month last year.
“Bidding wars also jumped in May because homebuyers felt they were starting to get more clarity around where the economy was headed, with cities around the nation lifting stay-at-home orders,” said Taylor Marr, lead economist for Redfin. “This gave house hunters more confidence to compete.”
Redfin reported on its blog that “fierce bidding wars” have cropped up in recent weeks, many involving all-cash offers that are pushing home prices upward. Of the 24 metros evaluated by the real estate brokerage, 11 saw a majority of offers facing competition in May, up from eight in April.
The highest rate of competition was found in Boston, which had 64.1% of Redfin offers facing bidding wars, up from 56% in April. Dallas, at 60.8%, and Washington, D.C., at 57.0%, joined Boston in the top three, while Salt Lake City; Denver; Seattle; Austin, Texas; San Francisco; Minneapolis; Los Angeles; and Portland, Oregon, also saw competition rates above 50%.
“We’re seeing a frenzy,” said Delince Louis, a Redfin agent in Boston. “Any home below $500,000 is receiving multiple offers; we just don’t have the supply to meet the demand.”
According to Louis, buyers are looking for increased space with the coronavirus pandemic continuing to ravage the country.
“People no longer want to share laundry or a yard,” he said. “I listed a single-family home in Boston proper at the height of the coronavirus lockdown and it got 14 offers. ‘Home’ means more right now than ever, and we’re seeing this new sense of urgency among buyers to find places with more privacy.”
Indeed, single family homes were most likely to see bidding wars last month, with 51.5% of Redfin single-family offers seeing competition, up from 45.6% in April. In comparison, 48.7% of townhouse offers and 38.8% of condo offers faced competition.
The pandemic has apparently raised the stakes in some of the country’s more competitive metros, such as Boston and Seattle. A Redfin agent in the Seattle metro area said that “virtually every home between $300,000 and $500,000 gets into a bidding war,” compared to about half before the pandemic hit.
Marr said while demand currently appears on the upswing, the buyer pool’s positivity ultimately rests on whether or not the coronavirus outbreak can be contained as the country continues to reopen.
“[W]ith coronavirus cases back on the rise in many states, only time will tell whether that [homebuyer] confidence is sustainable,” said Marr.