Nationally, just 11 percent of offers written by Redfin agents on behalf of their homebuying customers faced a bidding war in September, down from 41 percent a year earlier, but up slightly from the eight-year low of 10 percent set in August. Over the previous four years, the bidding war rate has averaged a 0.8 point drop from August to September, so even a small uptick is unusual for this time of year.
According to seasonal patterns of homebuying competition from 2013 to 2018, the national bidding war rate falls an average of 15 percentage points from March—the month it typically peaks—to September. This year, however, the seasonal decline has been far less pronounced, falling by just 4 points during the same period. Of course, this year the market just never got very competitive in the spring the way it typically does, so there wasn’t much of a spring peak from which to actually decline.
“After the coolest spring home-selling season in at least eight years, homebuying competition didn’t have far to fall, but low mortgage rates ultimately drove a modest uptick in bidding wars in late summer when they typically become less common,” said Redfin chief economist Daryl Fairweather. “With mortgage rates likely to remain near historic lows, I expect the bidding war rate to continue to level off—rather than follow its typical end-of-year descent—as 2019 comes to a close.”
What will really be telling is whether or not the market begins to heat up this coming spring, now that we’re starting from a cooler baseline than 2017 or 2018 as 2019 winds down.
In San Francisco, the most competitive metro in the nation, 28 percent of Redfin offers faced a bidding war last month. This was down from 69 percent a year earlier. In nearby San Jose, 18 percent of offers faced competition in September, down from 83 percent a year earlier.
“More sellers are pricing their homes a little below the price they expect to sell at, which is encouraging bidding wars to drive up price,” said Redfin San Jose agent Kimberly Douglas. “In addition to teaser pricing like this, I’ve seen very aggressive price drops happening more often lately.”
Las Vegas and Phoenix were tied as the second-most competitive metros with 21 percent of offers facing competition in both metros. No other metro area saw more than one in five offers face competition in September.
The least competitive market in September was Miami, where just two percent of the offers submitted by Redfin agents faced competition. Dallas (3.1%) and Austin (3.6%) were the second and third-least competitive.
Editor’s Note: Early in 2020 we discovered an issue with the data we had been collecting on bidding wars, which caused us to underestimate the rate of bidding wars in several markets. Redfin is currently in the process of fixing these data issues. Once complete, we will provide an updated estimate of the bidding wars for 2019.
