54% of Redfin offers faced bidding wars last month amid record-low mortgage rates and an acute shortage of homes for sale. Salt Lake City was the most competitive market, with 75% of offers encountering competition.
More than half of Redfin home offers faced competition in July for the third month in a row. Nationwide, 54% of Redfin offers encountered bidding wars last month, down slightly from June’s revised rate of 56%.
An offer is considered part of a bidding war if a Redfin agent reported that it received at least one competing bid.
Even as the coronavirus pandemic continues to send shockwaves through the U.S. economy, the bidding-war rate remains 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,” said Redfin chief economist Daryl Fairweather. “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.”
Single-family homes were most likely to encounter bidding wars in July, with 56% of Redfin offers facing competition, followed by townhouses, at 54%. Meanwhile, just 42% of offers for condos experienced bidding wars. Online searches for single-family homes recently rose to the highest level in four years as Americans sought out larger houses located farther away from dense urban areas, according to a June Redfin report.
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.
Salt Lake City, San Francisco and San Diego are the most competitive markets
Salt Lake City had the highest rate of competition, with three-quarters of Redfin offers facing bidding wars last month. In second place 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.”
Cleveland Redfin agent Danielle Parent recently encountered a seller who wrote into their contract that they would “strongly consider” any buyers who would be willing to take their cat along with their house. Parent’s clients agreed to adopt the cat—and offered 12% over the asking price—but were still outbid.
“You’d never know that we’re in the middle of a pandemic. It’s as hot a seller’s market as I’ve ever seen,” said Greg Mathers, a Redfin agent in the San Francisco area. “One of my clients recently bid $ 100,000 over a home’s asking price and only had the eighth-highest of 15 offers. It’s coming down to how much money you can throw at a house and how many contingencies you can waive.”
Las Vegas had the lowest bidding-war rate, with only 32% of offers facing competition last month. It’s followed by Miami and Chicago, at 36% and 40%, respectively.
To be included in this analysis, metros must have had at least 50 offers written by Redfin agents from July 1, 2020 to July 31, 2020.
Bidding-war rates by metro area, July 2020 and June 2020
|Metro Area||Share of Redfin offers that faced bidding wars in July 2020||Share of Redfin offers that faced bidding wars in June 2020|
|Salt Lake City, UT||75%||67%|
|San Francisco / San Jose, CA||67%||61%|
|San Diego, CA||65%||70%|
|Los Angeles, CA||58%||67%|
|New York, NY||53%||53%|
|Las Vegas, NV||32%||44%|