The 2017 housing market was the most competitive for homebuyers since 2013, according to a new analysis from Redfin.
Just over half of all offers written by Redfin agents this year encountered competition. That’s up from 49 percent in 2016, but below 2013’s high of 65 percent. The pace at which homes went off the market made the competition more intense this year. Homes found buyers after a median 45 days on market, six days fewer than 2016.
Forty-one percent of homes that were listed in 2017 were Redfin Hot Homes, a designation earned by homes with 7/10 or higher odds of going under contract within their first 14 days on the market, as determined by Redfin’s proprietary algorithm.
Grass Lawn in Redmond, Wash., earned the distinction of most competitive neighborhood in 2017. Nineteen of the 25 most competitive neighborhoods of 2017 were in the Seattle metro area, where 67 percent of homes listed this year were Hot Homes — the highest share of any market — and 62 percent of offers written by Redfin agents faced bidding wars.
Competition was strong across the Seattle market, both in more suburban neighborhoods like Grass Lawn and Crossroads (No. 3) and more urban neighborhoods like Lower Queen Anne (No. 13). Several neighborhoods in North Seattle made the ranking, including Pinehurst (No. 2), Victory Heights (No. 10) and Licton Springs (No. 11).
In Grass Lawn, 73 percent of homes sold for over asking price and the typical home found a buyer in just six days. The average sale-to-list price ratio was 108.4 percent, an indication that many homes were bid up well-above asking price.
“Grass Lawn is so super-competitive because it’s very close to the Microsoft campus, and Google is also expanding its footprint in the area. It is a suburban area with mostly older homes,” said Redfin Agent Gina Madeya. “The area offers easy access to one of only two freeways that can get you across Lake Washington and into downtown Seattle and it’s also a short drive from the shops and restaurants in downtown Redmond and Kirkland.”
Madeya helped a family purchase a home in Grass Lawn earlier this year.
The home, which she says came on the market slightly underpriced at $860,000, was bid up to over $1 million. Her clients were absolutely in love with the home. Their offer wasn’t the highest, but they won over the sellers by waiving all contingencies, working with a reputable lender and providing a $100,000 earnest money deposit.
“This sounds extreme, but that’s what it takes in some neighborhoods because demand is so high for so few homes,” Madeya noted. “My advice to a Seattle buyer is to get really clear about your full financial capability and your risk tolerance. Find out what you can truly afford and start looking at homes well below that amount, so that when that bidding war inevitably happens, you have some leverage to work with. Get clear early in the search so you and your agent can be more deliberate and strategic.”
Bidding war strategies often come with risks for the buyer, and Redfin recommends homebuyers speak to an agent to determine the appropriate strategy.
