Bidding-war rates are holding steady across the US as homebuyers continue to contend with the competition driven by scarcity in housing supply and record-low mortgage rates.
Around 54% of Redfin offers encountered bidding wars in July, slightly down from 56% in June, according to a new Redfin report. Single-family homes were most likely to face bidding wars last month, with 56% of Redfin offers experiencing competition. Townhouses (54%) and condos (42%) followed.
"You'd never know that we're in the middle of a pandemic. It's as hot a seller's market as I've ever seen," said Greg Mathers, a Redfin agent in the San Francisco area. "One of my clients recently bid $100,000 over a home's asking price and only had the eighth-highest of 15 offers. It's coming down to how much money you can throw at a house and how many contingencies you can waive."
Affordable homes, priced between $400,000 and $500,000, were also bidding-war magnets. More than half (56%) of offers for homes within this price range faced competition in July. Meanwhile, only 46% of offers for homes priced above $1.5 million received multiple bids.
"Bidding wars may slow down if interest rates tick up again, which could happen if we get good news about a coronavirus vaccine or more clarity around the outcome of the upcoming US presidential election," said Redfin Chief Economist Daryl Fairweather. "At the same time, we may still be in the early innings of the pandemic migration wave. If coronavirus cases continue to climb, more employers will likely make flexible remote work policies standard procedure, which will drive further migration out of large, expensive cities. As a result, we may see bidding wars gain more traction in suburban areas and small towns."
Of the 13 of the 21 metros included in its analysis, at least half of all offers faced bidding wars, Redfin revealed. Salt Lake City had the highest rate of competition, with 75% of Redfin offers facing competition in July. San Francisco/San Jose (67%), San Diego (65%), Washington, DC (62%), and Boston (61%) rounded out the top five most competitive markets last month.
"I'm seeing at least five offers on most properties, and that's no longer just limited to the more affordable homes," said Salt Lake City Redfin agent Chad Snow. "In the past, houses listed for more than $700,000 rarely got into bidding wars in Salt Lake City, but now everything seems to get multiple offers given super-low inventory."
Las Vegas, on the other hand, had the lowest bidding-war rate of 32%. Other less competitive markets were Miami (36%) and Chicago (40%).