For the first time in six months, bidding wars became just a bit less competitive in March.
Bidding Wars Slightly Dropped M/M in March
According to a new report from Redfin, 65% of home buyers faced bidding wars in March, down from 66.7% in February. Though slight, this drop in the number of bidding wars was magic to the ears of homebuyers.
“Most homebuyers are still encountering bidding wars, but competition is beginning to cool because surging mortgage rates and home prices are prompting some Americans to back out or put their buying plans on hold,” said Redfin’s Chief Economist Daryl Fairweather.
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March was the first month-over-month decline in bidding wars since September of 2021. However, bidding wars in March 2022 remained more common than they were one year ago when 62.2% of buyers faced competition.
Fairweather added, “We expect bidding wars to ease further in the coming months as rising mortgage rates price more buyers out of the market. That should provide some relief for people who can still afford to buy, as they’ll likely face fewer competitive offers and may no longer need to offer drastically over the asking price in order to win. Unfortunately, the slowdown in competition won’t help those who have already been priced out of homeownership and are now grappling with soaring rental costs.”
Mortgage Rates Soar Past 5%
The average 30-year fixed-rate mortgage hit 5.11% (now 5.37%), the highest level since 2010. Meanwhile, home prices increased +17% y/y to a record high of $392,750. The result? The typical homebuyer’s monthly payment has increased more than +30%.
Redfin reported that mortgage applications, home tours and online housing searches are declining while more sellers are lowering their asking prices.
Most Competitive Markets
Of the 36 metro areas in Redfin’s analysis on bidding wars, these metros had the highest bidding war rates in March:
- San Jose CA – 79.8% of offers faced bidding wars
- Boston MA – 79%
- Providence RI – 78.3%
- Worcester MA – 78.2%
- San Diego CA – 78.1%
- San Francisco CA – 76.4%
- Seattle WA – 76.3%
- Olympia WA – 75.9%
- Austin TX – 75.9%
- Baltimore MD and Denver CO- 74.5%
Townhouses Most Likely to See Bidding Wars
More and more homebuyers sought out townhouses in March because they were priced out of the single-family home market.
72.3% of Redfin offers for townhomes faced bidding wars in March while 70.2% of buyers for single-family homes faced competition. Bidding wars were present in 68.1% of offers for multi-family properties and 62.6% of offers for condos/co-ops.
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Thanks to Redfin.