Fifty-four percent of offers prepared by Redfin agents for their clients faced bidding wars in July, holding steady from the previous month’s 56%.
Redfin considers an offer part of a bidding war if it receives at least one competing bid. Historically low mortgage rates and the continuing shortage of homes on the market keep fueling competition among buyers, and Redfin chief economist Daryl Fairweather sees potential for bidding wars to gain more steam.
“Bidding wars may slow down if interest rates tick up again, which could happen if we get good news about a coronavirus vaccine or more clarity around the outcome of the upcoming U.S. presidential election,” Fairweather said. “At the same time, we may still be in the early innings of the pandemic migration wave. If coronavirus cases continue to climb, more employers will likely make flexible remote work policies standard procedure, which will drive further migration out of large, expensive cities.
“As a result, we may see bidding wars gain more traction in suburban areas and small towns.”
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The movement away from density was seen in the bidding war numbers, with 56% of offers on single-family homes garnering competition compared to just 42% of offers for condominiums.
Among metros, the highest rate of competition was seen in Salt Lake City, with 75% of offers coming up against bidding wars. Four other metros — San Francisco/San Jose (with 67% of offers facing bidding wars); San Diego (65%); Washington, D.C. (62%); and Boston (61%) — had at least 60% of buyers face at least one other offer.
“I’m seeing at least five offers on most properties, and that’s no longer just limited to the more affordable homes,” said Salt Lake City Redfin agent Chad Snow. “In the past, houses listed for more than $700,000 rarely got into bidding wars in Salt Lake City, but now everything seems to get multiple offers given super low inventory.”
At the other end of the spectrum was Las Vegas, where just 32% of July offers faced competition. Miami, which had the smallest percentage of offers face competition last month at 34%, saw a slight bidding war gain to 36%, while Chicago had a bidding-war rate of 40%.
From a price standpoint, lower price points continue to face stiffer competition. Home priced between $400,000 and $500,000 had 56% of offers face at least one other bid, compared to 46% of offers for homes listed above $1.5 million.
