A nationwide survey conducted by Redfin found that nearly 56% of offers for homes faced bidding wars in January, up nearly 4% from December of last year. More than half of homes are now going under contract in less than two weeks. This marks the ninth consecutive month where more than half of home offers faced competition. Bidding wars are rising rapidly even as home prices soar.
A big reason longtime searches for a home haven’t yet bought a house is mostly thanks to getting outbid. About 40% of potential buyers cited that reason in a new survey from the National Association of Home Builders. A year ago, 44% of people said their biggest reason for not buying was unaffordable prices while only 19% said they were getting outbid.
The rise in remote work due to the pandemic continues to push Americans to relocate to different areas in search for bigger homes with more spacious yards. Pending sales were up 28% year over year in the week ending January 24, but the number of homes for sale was down 36%. Historically low mortgage rates remain with the average 30-year fixed rate coming in at 2.73% in the week ending February 4. This has also been a major motivating factor for buyers.
“The number of homes for sale is at an all-time low and the supply shortage only seems to be getting worse,” said Redfin chief economist Daryl Fairweather. “With so few new listings hitting the market, I expect bidding wars to become more common and involve even more potential buyers as we head into the spring homebuying season. The best thing buyers can do is prepare: Prepare to see homes quickly as soon as they hit the market; prepare by talking to a lender and getting preapproved; and prepare by talking to your agent about how much a home you like is worth so you can go into a bidding war with your strongest offer tactics but know when to back away if the price escalates more than you’re willing to pay.”
Homes priced below $200,000 were the least likely to face competition with a bidding-war rate of 42.5%. Homes priced between $200,000 and $300,000 had a rate or 48.4% while $300,000 to $400,000 homes had a rate of 52.6%.
The survey found that single-family homes are most likely to face competition. The rate of single-family homes having a bidding war was 58.7% in January. The highest rate of any property type. Townhouses followed with 54.8% with condos coming in at a rate or 44.6%. Single-family homes have been especially popular in the past year due to the pandemic and surge in remote work. Homebuyers are prioritizing space for in-home offices and schoolwork.
The competitive bidding across the nation is strongest in Salt Lake City, where 9 out of 10 offers faced competition. That’s according to Redfin’s survey of 24 major markets. Other cities facing fierce competition are San Diego (78.9%), the Bay Area (77.1%), Denver (73.9%), and Seattle (73.8%). Charlotte was not included in the survey, but Raleigh, NC came in at number 12 with 58.8%.