Boston Real Estate Bidding Wars Resume
If your clients’ plans for homebuying this spring include visions of waltzing in with an offer anytime they please, you might want to prepare them to be on their feet for a while. A new report from Redfin noted that the competition is as stiff as ever.
Nationwide, the real estate company’s agents faced bidding wars on nearly three-quarters of the home offers they wrote in April. These included 79.7% of the offers in Boston, a bump from the 74.8% rate this past March and leap from the 56.3% rate in April 2020.
Redfin’s report included data from 45 markets in which its agents recorded at least 20 offers in both April 2021 and March 2021. The report defined a bidding war as any offer that faced at least one competing bid. The five markets with the highest bidding-war rates were Salt Lake City (83.5%), both San Diego and Spokane (83.3%), Boise (81.8%) and Phoenix (80.5%).
Overall, Redfin agents across the country saw bidding wars on 72% of the homes on which they submitted offers. This marked an increase over both the prior month (66.7%) and April 2020 (44.9%), when pandemic-related shutdowns were taking hold. April 2021 was also “the 12th-straight month in which more than half of home offers encountered competition,” Redfin noted.
“In today’s market, buyers just have to be comfortable with losing a few deals before they win one,” said Kristin Lopez, a Redfin agent in Boise, Idaho, in the company’s press release on the report. “It’s a marathon, not a sprint.”
In her red-hot market, Lopez noted that the tactics some successful buyers used to get their bids across the finish line included all-cash offers, free rent-backs to sellers and early earnest-money payments.
Clearly, it’s a good time to be a listings agent. Low mortgage rates and remote-work opportunities are among the factors expected to continue favoring sellers for the foreseeable future. But the Redfin data included one possible sign of easing competition. When compared to this past March, April’s bidding-war rate was lower in 17 markets. These included Salt Lake City, where that nationwide-leading 83.5% rate was actually a cool-down from March’s 86.1% rate. San Francisco/San Jose (73.2%, compared to 77.8%) and Las Vegas (71.1%, compared to 81.0%) were among the others that also saw a month-over-month decline.
In its press release, Redfin noted that the data is subject to revision.
54% of Redfin offers faced bidding wars last month amid record-low mortgage rates and an acute shortage of homes for sale. Boston was one of the most competitive markets.
More than half of Redfin home offers faced competition in July for the third month in a row. Nationwide, 54% of Redfin offers encountered bidding wars last month, down slightly from June’s revised rate of 56%.
An offer is considered part of a bidding war if a Redfin agent reported that it received at least one competing bid.
Bidding Wars Remain Steady
Even as the coronavirus pandemic continues to send shockwaves through the U.S. economy, the bidding-war rate remains steady as homebuyers contend with competition driven by a dearth of homes for sale and record-low mortgage rates. Last month, the average rate on 30-year fixed mortgages dropped below 3% for the first time in recorded history.
“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 U.S. presidential election.
Single-family homes were most likely to encounter bidding wars in July, with 56% of Redfin offers facing competition, followed by townhouses, at 54%. Meanwhile, just 42% of offers for condos experienced bidding wars. Online searches for single-family homes recently rose to the highest level in four years as Americans sought out larger houses located farther away from dense urban areas, according to a June Redfin report.
When broken down by price, homes priced between $400,000 and $500,000 were most likely to be met with the competition, with 56% of offers facing bidding wars. By comparison, just 46% of offers for homes that were listed above $1.5 million received multiple bids in July.
Bidding-war rates by metro area, July 2020 and June 2020
|Metro Area||Share of Redfin offers that faced bidding wars in July 2020||Share of Redfin offers that faced bidding wars in June 2020|
|Salt Lake City, UT||75%||67%|
|San Francisco / San Jose, CA||67%||61%|
|San Diego, CA||65%||70%|
|Los Angeles, CA||58%||67%|
|New York, NY||53%||53%|
|Las Vegas, NV||32%||44%|