54 Percent of Home Offers in U.S. Faced Bidding Wars in November
National property broker Redfin is reporting this week that 53.6 percent of U.S. home offers written by Redfin agents nationwide faced competition in November 2020. While that's down from a revised rate of 58.5 percent in October, it represents the seventh-straight month in which more than half of Redfin offers encountered bidding wars.
U.S. homebuyers have been grappling with fierce competition this year due to historically low mortgage interest rates, an acute housing shortage and a sudden wave of migration made possible by remote work during the coronavirus pandemic.
San Diego Was the Most Competitive Market; Minneapolis Was the Least Competitive
The San Diego metro area had the highest bidding-war rate of the 24 metros in this analysis, with 75.3 percent of Redfin offers facing competition. It was followed by Denver (66.7%), San Francisco/San Jose (65.8%) and Seattle (60.9%). Sacramento--the most popular destination for people looking to move to a different metro area--rounded out the top five, at 60.0 percent.
Justin Hess, a Redfin real estate agent in the Denver area, recently received 22 offers for a three-bedroom single-family home he listed in Thornton, CO, a Denver suburb. The winning bidder ended up paying $35,000 over the $410,000 asking price and waiving their appraisal contingency.
"Single-family homes that are priced right, in good condition and in a desirable neighborhood are still selling quickly for top dollar," Hess said. "If you're a buyer, you had better bring your best punch and expect competition. People are paying a premium for the latest and greatest, updated, remodeled, turnkey homes."
Some of the places with the highest bidding-war rates have also seen significant growth in new listings--one factor that's allowing competition to flourish, according to Redfin Chief Economist Daryl Fairweather.
"Buyers aren't going to compete for homes that have been sitting on the market," Fairweather said. "They will typically only get into a bidding war for a newly-listed, desirable home that is move-in ready."
In San Diego, for example, new listings were up 13% year over year in November, outpacing 5 percent growth in Minneapolis.
Minneapolis had a lower rate of competition than any other metro area in this analysis, with 34.6 percent of Redfin offers facing bidding wars in November. Also in the bottom five were Chicago (36.4 percent), Tampa, FL (37.1 percent), Houston (37.3 percent) and New York (37.6 percent).
Condos Were the Least Likely to Face Bidding Wars
Condos were the least likely to encounter competition in November, with 38.3 percent of Redfin offers facing bidding wars. That compares with 48.7 percent of offers for townhouses and 57.3 percent of offers for single-family homes.
The condo market has experienced relatively sluggish growth as remote work and a shift in homebuyer preferences due to the pandemic have made single-family homes more sought after.