(NASDAQ: RDFN) —Nationwide, 59.6% of home offers written by Redfin agents faced bidding wars in December 2021, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s the lowest share in 12 months and down from a revised rate of 61.3% in November, but up from 54% in December 2020.
Competition has dipped in recent months partly because the housing market typically slows in the winter, with many buyers and sellers taking a break during the holidays. But while the bidding-war rate has fallen from its pandemic peak of 74.6% in April 2021, the housing market remains quite competitive as house hunters grapple with a record shortage of homes for sale.
“Buyers should anticipate that they may not win a house until their sixth or seventh bid. If you’re the type of person who falls in love with a house, this is not your market,” said Candace Evans, a Redfin team manager in New York. “If you show a house to 10 buyers, you’ll probably get eight offers. An agent on my team just put a home in the Bronx on the market and started receiving offers even though there hadn't been a single open house or tour yet. The house ultimately received over 10 offers and went for well above the asking price.”
The housing market has been remarkably hot during the pandemic as low mortgage rates and remote work have encouraged Americans to move and buy homes. More than half of Redfin offers have faced bidding wars since May 2020. But with rising mortgage rates now making the homebuying process more expensive, some buyers may no longer be able to stretch their budgets in order to write offers competitive enough to win.
Pricey Homes Are Most Likely to Face Bidding Wars
Nearly two-thirds (64.6%) of offers for homes priced between $800,000 and $1 million faced bidding wars in December, the highest share of any price bucket. Next came homes in the $1 million to $1.5 million range (62%), followed by homes priced over $1.5 million (61.7%). Vacation homes, which are often pricey, have become increasingly popular during the pandemic—one possible explanation for elevated competition in the high-end market.
The lower price buckets were competitive as well, with more than 55% of offers for homes priced between $200,000 and $800,000 facing bidding wars.
Townhouses were the most competitive property type, with 62% of offers facing competition, followed by single-family homes, at 61.3%. Next came multi-family (54.7%) and condos (53.3%). Many house hunters are likely eyeing townhouses after being priced out of the market for single-family homes.
Salt Lake City and Tucson Have the Highest Bidding-War Rates
Salt Lake City had the highest bidding-war rate of the 37 U.S. metropolitan areas in this analysis, with 74% of offers written by Redfin agents facing competition in December. Next came Tucson, AZ at 73.1% and San Diego, CA at 71.1%. Virginia Beach, VA and Seattle, WA rounded out the top five, with bidding-war rates of 70.6% and 70%, respectively.
Metros must have had at least 20 offers recorded by Redfin agents in both December 2021 and November 2021 to be included in this analysis.
“I’ve been working with two clients since October and finally got them under contract after they lost out on seven other homes,” said Jennifer Ciacci, a Redfin agent in Portland, OR, where the bidding-war rate was 65.1% last month. “I haven’t seen inventory this low since I started in real estate. Buying a home today is emotionally exhausting, but house hunters aren’t giving up. I’m seeing buyers jump in and write a few offers, lose bidding wars and then retreat for a bit. But they usually end up coming back once they’ve had a chance to lick their wounds.”
Ciacci continued: “I tell my buyers not to compromise everything by giving up all the contingencies and safe-guards that are in place to protect them. They need to be aggressive in order to win, but shouldn’t put their family’s financial health in jeopardy by doing things like blindly waiving inspections altogether.”
To view the full report, including charts and methodology, please visit: https://www.redfin.com/news/real-estate-bidding-wars-december-2021
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Ally Braun, 206-588-6863