- National inventory shortages spurring bidding wars nation-wide
- Housing stock levels down -18.9% annually in May, according to Redfin
The more inventory levels drop, the more potential homebuyers and their respective real estate professionals have to contend with bidding wars. It’s the old supply and demand equation…the fewer there are, the more expensive they become. Multiply that supply and demand equation by the pent-up demand from the coronavirus and nearly one half of Redfin offers faced bidding war competition.
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In May, the online brokerage Redfin found that 49.4% of offers on homes put in by its agents wound up in bidding wars. This 49.4% was up from 43.9% during April. Helping to fuel these bidding wars was the decline of -18.9% in the number of listing on the market.
“Bidding wars also jumped in May because homebuyers felt they were starting to get more clarity around the nation lifting stay-at-home orders. This gave house hunters more confidence to compete,” said Redfin lead economist Taylor Marr. “But, with coronavirus cases back on the rise in many states, only time will tell whether that confidence is sustainable.”
Redfin analyzed 24 metros for this research on bidding wars. It found that 11 metros faced bidding wars in May (many with all-cash offers) whereas in April, eight metros saw competition via bidding wars. Take a look:
Shares of Bidding Shares of Bidding
Wars in May Wars in April
Boston 64.1% 56.0%
Dallas 60.8% 43.2%
Washington DC 57.0% 47.5%
Salt Lake City 55.7% 57.5%
Denver 55.4% 40.4%
Seattle 55.2% 51.2%
Austin 54.8% 44.7%
San Francisco 53.4% 52.4%
Minneapolis 52.2% 41.2%
Los Angeles 51.2% 47.1%
Portland OR 51.0% 50.6%
Detroit 50.0% 23.5%
Additionally, home buyers in San Diego, New York, Sacramento, Atlanta, Philadelphia, Phoenix and Houston had to face bidding wars between 40% – 49% of the time when making their offers. And homebuyers in Raleigh, Chicago, Las Vegas and Tampa had to face bidding wars in 30% – 39% of the time.
Detroit saw the biggest increase of bidding wars, rising to 50% in May from just 23.5% in April and Las Vegas saw the biggest decrease of bidding wars, declining from 55.0% in April to just 33.8% in May.
Brokers said over and over again that any house priced below $500,000 was receiving multiple offers primarily due to lack of supply.
Single-family homes were the name of the game…51.5% faced competition in May whereas 45.6% of single-family homes faced bidding wars in April. “People no longer want to share laundry or a yard,” said Delince Louis, a Redfin agent in Boston. ”And,” Louis continued, “we’re seeing this new sense of urgency among buyers to find places with more privacy.”
Thanks to Redfin and MansionGlobal.