Redfin: Bidding Wars Fall to 8-Year Low

Redfin, Seattle, said just 10.4 percent of offers written by its agents on behalf of their home buying customers saw a bidding war in August, down from more than 42 percent a year earlier, to the lowest on record since 2011.

The report said the national bidding war rate reached a high of 59 percent in March 2018 before starting to drop. Redfin chief economist Daryl Fairweather said home buyers “reached their limit with sky-high housing prices” and rising mortgage rates.

“Despite remaining near three-year lows, mortgage rates have failed to bring enough buyers to the market to rev up competition for homes this summer,” Fairweather said. “Recession fears have been enough to spook some would-be buyers from making the big financial commitment of a home purchase.

Redfin said San Francisco was the most competitive market in August, with 31 percent of offers written by Redfin agents on behalf of their home buying customers facing a bidding war. Even so, the local bidding war rate there fell from 73.5 percent a year earlier and down slightly from 31.8 percent in July. San Diego showed an 18.4 percent bidding war rate, followed by Las Vegas (17.1%), Boston (15%) and Los Angeles (14.4%).

The rate in San Jose was 10.3 percent, down from 77 percent a year earlier, and in Seattle, another expensive West Coast metro, it was 9.4 percent, a big year-over-year dip from 37.8 percent in August 2018.

“Competition in the Seattle area has certainly slowed down since the second half of 2018,” said Seattle area Redfin agent Michelle Santos. “Last year, five out of five offers I submitted faced competition; now, it’s one in five,”

Santos noted for “desirable” homes, “competition is still fierce, and the winning offer is one that’s above the list price and waives contingencies. At the same time, average homes sit on the market for quite some time before they get any offers.”

Redfin reported Atlanta as the least competitive market, with just 2.4 percent of the offers submitted facing competition in August, followed by Miami (3.1%), Raleigh (4.2%), Philadelphia (4.3%) and Chicago (5%).

Fairweather said assuming a recession doesn’t arrive this fall or winter, consumers will likely adjust to the “new ‘normal” of continued volatility in the stock and global markets. “And the people who need and want to make a move will take advantage of low mortgage rates,” she said. “As a result, I still expect home buying competition to pick back up in the new year.”

The report can be accessed at https://www.redfin.com/blog/august-2019-real-estate-bidding-wars.