An increasing share of home-purchase offers submitted by Redfin agents are facing competition, the Seattle-based real estate brokerage reported.
Last month, a majority of Redfin bids faced multiple offers, according to a nationwide survey of more than 500 Redfin agents. With low rates bringing buyers to the market but inventory at its lowest level since 2010, competition is “spiking hard and early in 2020,” according to Redfin senior data journalist Tim Ellis.
“A lack of listings means buyers are having to compete with one another to secure a sale and lock in a mortgage rate,” said Daryl Fairweather, Redfin chief economist. “This competition pushes up prices, which means that even though buyers can get a good deal on a mortgage now, they are often paying a higher sticker price.”
The increased competition aligns with a recent forecast from First American Financial Corp., which predicted that a seller’s market could persist in 2020 due to low supply.
“Unless we see a lot more inventory hit the market in February and March, this spring could be very difficult for homebuyers as they experience the mother of all bidding wars in most markets across the country,” Ellis wrote on Redfin’s blog.
The San Francisco Bay Area saw the nation’s highest rate of competition this past January, with Redfin agents there estimating that multiple offers accompanied their bids more than 90% of the time. Other highly competitive areas dot the nation, according to the survey.
One Redfin agent in Portland, Oregon, reported that a client made an offer $8,000 above the list price on a mobile home “pretty far out of the metro area and not even in great condition,” and faced 30 other offers two days later. And in Phoenix, another agent said that “inventory is so low right now that one of my clients has run into bidding wars with more than 10 offers for three weekends in a row. Offering well above listing price isn’t enough in today’s market. You have to do that, plus waive contingencies just to have your offer considered by sellers.”
In Philadelphia, homes that have idled on the market for months are suddenly seeing multiple offers.
“One home I recently helped my clients win had been on the market since June and hadn’t been reduced in price since November,” Philadelphia-based Redfin agent Brenda Beiser said. “When we looked at it in mid-January, the agent told me there had been six other appointments the day before. By the time our offer went in that evening, they had received two other offers.”