Bidding Wars Hold Steady in July—More than Half See Competition

Redfin, Seattle, said 54% of its home offers faced bidding wars last month amid record-low mortgage rates and an acute shortage of homes for sale. This marks the third month in a row where more than half of Redfin home offers faced competition. 

Salt Lake City was the most competitive market, with 75% of offers encountering competition, Redfin said. 

Redfin Chief Economist Daryl Fairweather said even as the coronavirus pandemic continues to send shockwaves through the U.S. economy, bidding-war rates remained steady as homebuyers contend with competition driven by a dearth of homes for sale and record-low mortgage rates. Last month, the average rate on 30-year fixed mortgages dropped below 3% for the first time in recorded history. 

“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.” 

The report (https://www.redfin.com/blog/bidding-wars-remain-high-in-july) said single-family homes were most likely to encounter bidding wars in July, with 56% of offers facing competition, followed by townhouses at 54%. Meanwhile, just 42% of offers for condos experienced bidding wars. 

When broken down by price, homes priced between $400,000 and $500,000 were most likely to be met with competition, with 56% of offers facing bidding wars. By comparison, just 46% of offers for homes that were listed at above $1.5 million received multiple bids in July. 

Following Salt Lake City in competitive offers was San Francisco/San Jose, at 67%, followed by San Diego, at 65%. At least half of all offers faced bidding wars in 13 of the 21 metros included in this analysis. 

“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.” 

Las Vegas had the lowest bidding-war rate, with only 32% of offers facing competition last month, followed by Miami and Chicago, at 36% and 40%, respectively.