According to a new report from Redfin, some 59.6% of home offers written by Redfin agents faced bidding wars nationwide in December 2021. Data found it to be the lowest share in 12 months, and down from a revised rate of 61.3% in November, but up from 54% in December 2020.
Competition has dropped in recent months as the housing market typically slows in the winter, with many buyers and sellers taking a break during the holidays. While the bidding-war rate has fallen from its pandemic peak of 74.6% in April 2021, the housing market remains quite competitive as homebuyers are left with a record shortage of homes for sale.
“Buyers should anticipate that they may not win a house until their sixth or seventh bid. If you’re the type of person who falls in love with a house, this is not your market,” said Candace Evans, New York Team Manager of Redfin. “If you show a house to 10 buyers, you’ll probably get eight offers. An agent on my team just put a home in the Bronx on the market and started receiving offers even though there hadn't been a single open house or tour yet. The house ultimately received over 10 offers and went for well above the asking price.”
The housing market has been remarkably hot during the pandemic as low mortgage rates and remote work have encouraged Americans to move and buy homes. More than half of Redfin offers have faced bidding wars since May 2020. But with rising mortgage rates now making the homebuying process more expensive, some buyers may no longer be able to stretch their budgets in order to write offers competitive enough to win.
Nearly 64.6% of offers for homes priced between $800,000 and $1 million faced bidding wars in December, the highest share of any market price. Next came homes in the $1 million to $1.5 million range at 62%, followed by homes priced over $1.5 million at 61.7%. Vacation homes have become increasingly popular throughout the pandemic. This may be another possible explanation for elevated competition in the high-end market.
The lower price buckets were competitive as well, with more than 55% of offers for homes priced between $200,000 and $800,000 facing competitive bidding wars. Many house hunters are also likely eyeing townhouses after being priced out of the market for single-family homes.
The most competitive property types facing offer competition are:
- Townhomes (62%)
- Single-family homes (61.3%)
- Multi-family homes (54.7%)
- Condos (53.3%)
Salt Lake City had the highest bidding-war rate of the 37 U.S. metro areas in the analysis, with 74% of offers written by Redfin agents facing competition in December. Next came Tucson, AZ at 73.1% and San Diego, CA at 71.1%. Virginia Beach, VA and Seattle, WA rounded out the top five, with bidding-war rates of 70.6% and 70%.
“I’ve been working with two clients since October and finally got them under contract after they lost out on seven other homes,” said Jennifer Ciacci, a Redfin Agent in Portland. “I haven’t seen inventory this low since I started in real estate. Buying a home today is emotionally exhausting, but house hunters aren’t giving up. I’m seeing buyers jump in and write a few offers, lose bidding wars and then retreat for a bit. But they usually end up coming back once they’ve had a chance to lick their wounds.”
Popular metros had at least 20 offers recorded by Redfin agents in both December 2021 and November 2021 to be included in this analysis.
To view the full report, click here.