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70% of homebuyers still facing bidding wars

by Alsha Khan

70% of homebuyers still facing bidding wars

Market competition has eased up, but seven in 10 buyers still face bidding wars during the homebuying process, according to a new report from Redfin. 

In May, 70.4% of the home offers written by Redfin agents faced at least one competing bid, down from 73.6% in April but much higher than the 52.7% seen in May 2020 when the onset of the pandemic slowed the housing market due to lockdown orders. 

Redfin attributes the monthly decline to seasonality possibly quieting the homebuying season; competition usually tapers in the early summer. 

Bidding wars have become commonplace in today’s market, especially since the pandemic led to lower mortgage rates and flexible work policies. The shortage of housing inventory further exacerbated the pressure on the market and led to even fiercer competition. 

However, there are early signs that the market may be cooling off. For example, home-purchase applications have been declining since March, and pending sales have declined10% from their peak earlier this year. 

According to Redfin chief economist Daryl Fairweather, “The housing market was going 100 miles per hour and now it’s down to 80.” Fairweather said that some house hunters are starting to sit out the market because they’re either “priced out or burned out.” And with stay-at-home orders slowly being lifted, more Americans are spending their money on travel and dining out instead of tossing their hats into the housing market. 

Chicago saw the rate of bidding wars decline 2% on a monthly basis to 64.8% in May. Comparatively, only 37.7% of Chicago Redfin offers faced bidding wars in May 2020. 

Spokane, Wash., had the highest bidding war rate of the 50 U.S. metropolitan areas in Redfin’s report, with 86.7% of offers facing competition in May, followed by Raleigh, N.C., (84.5%), Tucson, Ariz., (81.8%), Salt Lake City (81.5%) and Charleston, S.C., (79.3%) rounding out the top five. 

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