- Home supplies across country at lowest point in 7 years
- Bidding wars spiking early and hard in 2020
- Redfin survey of 500 agents nationwide in 25 markets reports market is heading towards “mother of all bidding wars”
Redfin’s chief economist, Daryl Fairweather, responded to the online brokerage firm’s recent survey of some 500 agents nationwide in 25 markets on competitive bidding wars by saying, “Low mortgage rates have brought buyers back to the housing market, but a lack of listings means buyers are having to compete with one another to secure a sale and lock in a mortgage. This competition pushes up prices, which means that even though buyers can get a good deal on a mortgage now, they are often paying a higher sticker price.”
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The San Francisco Bay Area has the highest rate of competition despite median home prices being well above $1M. Redfin San Jose agent Jennifer Tollenaar said, “In order to beat 24 other offers, (my clients) put 50% down, wrote a great letter to the sellers and removed all contingencies. This was on a home with a purchase price of over $1.7M.”
In Los Angeles, large down payments are the name of the game along with often removing all appraisal and loan contingencies. In Phoenix, inventory is so low that “…offering well above the listing price isn’t enough in today’s market, “ said Thomas Wiederstein. “You have to do that plus waive contingencies just to have your offer even considered by sellers.”
Redfin’s agents in Philadelphia are also experiencing “extreme” competition even for listings that have been on the market for several months. One client and agent viewed a listing that had been on the market for 6+ months in mid-January. Six other appointments had seen the listing the day before and by the time their offer was registered that same evening, the property had already received two other offers.
The most “shocking” story came from a Portland OR Redfin agent, Meme Loggins. Loggins reported that her clients had rendered an offer $8,000 above the $275,000 listing price. Her clients competed with 30 other offers. Loggins summed it up by saying, “This bidding frenzy took place on a mobile home that was pretty far out of the metro and not even in great condition. It’s getting crazy out there!” .
Clearly, this is a recurring theme of imbalance when it comes to supply and demand. Without more inventory hitting the market, a lot more inventory, the spring buying season has the potential to be very difficult for buyers and agents alike as the market is heading towards “the mother of all bidding wars.”
ˆThanks to Redfin’s Tim Ellis for source data.