More than half of Redfin offers for homes faced competition in June for the second month in a row. Nationwide, 53.7% of Redfin offers faced bidding wars last month, up from a revised rate of 51.8% in May and 44.4% in April*.
An offer is considered part of a bidding war if a Redfin agent reported that it received at least one competing bid.
The bidding-war rate is rising even as the coronavirus pandemic and the shaky economy that comes with it continues to spread across the country.
“Bidding wars continue to be fueled by historically low mortgage rates and fewer homes up for sale than almost any time in the last two decades,” said Redfin economist Taylor Marr. “It’s like a game of musical chairs where only the best bidders get a seat. Both renters and move-up buyers who have held onto their jobs are vying for the small number of single-family homes on the market as they realize they need more space for their families.”
The average mortgage rate fell to 3.03% for the week ending July 9, the lowest 30-year fixed-rate number since Freddie Mac began tracking the statistic in 1971. Lower mortgage rates make for lower monthly housing payments, which encourages buyers to enter the market and make higher offers on homes. The number of homes for sale nationwide in June was down 21.3% from the year before, bringing inventory down to its lowest level since at least 2012 on a seasonally adjusted basis. The number of new listings was down 12% year over year.
Single-family homes were most likely to be part of a bidding war in June, with 56.2% of Redfin offers facing competition, followed closely by townhouses (54.2%). By contrast, 40.5% of condos faced bidding wars. Single-family homes face a bigger supply constraint than townhouses or condos, with supply in June down 25% since the year before. That’s compared with a 10.7% year-over-year drop for townhouses and a 7% dip for condos.
With 72.4% of Redfin offers facing competition, Boston had the highest bidding-war rate of all the metros included in this analysis in June. Boston also topped the list in May, when 67.2% of offers were part of a bidding war.
“This is the most competitive real estate market I can remember,” said James Gulden, who has been a Boston Redfin agent since 2012. “There are multiple bids on nearly every property I see, whether I’m representing the buyer or the seller. I’m seeing the most competition in the suburbs, where homes are selling in a matter of days. Sellers don’t want homes to be on the market any longer than necessary because of COVID-19, so they’re setting offer deadlines, which create a frenzied, competitive atmosphere.”
“A buyer contacted me on Saturday night a few weeks ago to put in an offer on a house with a deadline at 10 a.m. on Sunday,” Gulden continued. “By Sunday morning, the house had five offers. Despite my client offering about $20,000 over the asking price with no contingencies, the house went to someone else who offered even more.”
Next come San Diego and Salt Lake City, where 65.7% and 63.8% of offers faced competition, respectively. More than half of all offers faced bidding wars in 12 of the 24 metros included in this analysis.
Shoshana Godwin, a Redfin agent in Seattle, said many of her clients are eager to buy a larger home because they’re working remotely and need more space, but their offers are facing competition.
“In the last month, my clients have made very few offers that haven’t been part of a bidding war,” Godwin said. “Buyers need to waive contingencies for a chance at winning a bidding war. I’ve noticed that sellers are providing inspection reports to avoid additional people coming into their home, and that encourages more offers because potential buyers don’t need to make the financial commitment of paying $500 to $800 for pre-inspections on every house they like.”
Miami, where 32.4% of offers faced competition, had the lowest bidding-war rate. It’s followed by Chicago (37.8%) and Las Vegas (39.2%).
To be included in this analysis, metros must have had at least 50 offers written by Redfin agents from June 1, 2020 to June 30, 2020.
