63.4% of Redfin Offers Faced Competition in March, Compared with 73.4% Last Year
As the spring home-buying season kicked off, bidding wars again rose from the winter months. In March, 63.4 percent of offers written by Redfin agents across 19 markets faced competition from other buyers, up from 58.7 percent in February. This spring’s escalation in competition hasn’t kept pace with 2013, when the bidding war rate peaked at 73.4 percent in March, but the housing market is still tough for buyers in many markets. In fact, some markets, including Seattle, Portland and Denver, are likely to see fiercer competition than last year, and a new Redfin analysis shows that more than half of all existing home inventory is unlikely to be listed for sale any time soon.
According to Redfin agent Minni MacFarlane in Orange County, Calif., “Competition can still get intense, but because prices have risen so much, my clients and I try to be more discerning about how far we should go to win a home. The past two years we’d compete against people camping out in their cars or entering lotteries to win new homes. This year, a bidding war is more likely to drive the price of a home higher than it’s worth competing for, and I think it will be easier for us to walk away from a situation like that.”
Other data highlights:
Multiple Offers:
- In the most competitive market, San Jose, Calif., 89.8% of homes had multiple offers, up from 86.7% last month, but short of last year’s 92.8%.
- Baltimore (50.9%) and Boston (75.9%) had the largest year-over-year increases in bidding wars, up from 42.9% and 72.4%, respectively.
- In San Diego, 66% of homes saw multiple offers, a significant drop-off from last year’s 89.2%.
Price Escalations:
- Across 19 markets, 37.9% of homes sold above the asking price, up from 22% at the start of the year, but down from 44.8% last year.
- While the average home in these markets sold at or slightly below asking price, homes in San Jose, Calif., sold for a whopping 13.8% above list price, up from 5.5% above last year.
- In San Diego, the average home sold 4% below asking price, significantly lower than a year ago when the average home was selling for about asking price.
Competitive Strategies:
- Compared with last year, more buyers were paying all cash (7.2% vs. 3.9%).
- More buyers waived financing (9.4% vs. 6.6%).
- More buyers waived pre-inspection (6.1% vs. 4.4%).
Washington, D.C., Redfin agent Tom Lewis told us, “Buyers are getting frustrated by the competition. I try to help my clients stay calm and keep things in perspective when they get into a bidding war, because once you’ve already made an offer, it can be tempting to become overly aggressive. But in my experience, patience pays off. The right home is always out there, and it doesn’t need to come with regrets.”
Table 1: Competitiveness by Market
| Market | March 2014 | February 2014 | March 2013 | Percent of Homes Sold Over Asking |
Average Sale-to-List Difference |
|---|---|---|---|---|---|
| San Jose | 89.8% | 86.7% | 92.8% | 80.0% | 13.8% |
| San Francisco | 86.1% | 83.2% | 91.3% | 70.8% | 3.8% |
| Los Angeles | 80.3% | 81.0% | 87.8% | 53.3% | 1.0% |
| Boston | 75.9% | 66.7% | 72.4% | 26.7% | 0.0% |
| Orange County | 75.0% | 74.7% | 95.4% | 33.3% | 0.0% |
| San Diego | 66.0% | 59.7% | 89.2% | 13.3% | -4.0% |
| Seattle | 62.1% | 60.8% | 71.9% | 41.9% | 0.0% |
| Washington, D.C. | 59.7% | 51.1% | 73.0% | 34.0% | -0.1% |
| Baltimore | 50.9% | 38.2% | 42.9% | 0.0% | -1.7% |
| Portland | 46.3% | 50.0% | 63.0% | 30.8% | -0.0% |
| Chicago | 34.7% | 39.0% | 50.5% | 25.0% | -1.8% |
| 19 Markets | 63.4% | 61.4% | 76.4% | 37.9% | 0.0% |
Table 2: Features of Redfin Offers in 10 Markets – What Percent of Winning Offers…
| Market | All Cash | Waived Financing | Waived Inspection | Waived Pre-inspection | Cover Letter |
|---|---|---|---|---|---|
| San Jose | 20.0% | 20.0% | 60.0% | 0.0% | 80.0% |
| San Francisco | 8.3% | 12.5% | 22.9% | 6.2% | 52.1% |
| Los Angeles | 13.3% | 13.3% | 0.0% | 0.0% | 60.0% |
| Boston | 20.0% | 33.3% | 33.3% | 6.7% | 40.0% |
| Orange County | 5.6% | 0.0% | 0.0% | 0.0% | 61.1% |
| San Diego | 0.0% | 0.0% | 0.0% | 0.0% | 46.7% |
| Seattle | 14.0% | 11.6% | 23.3% | 23.3% | 37.2% |
| Washington, D.C. | 4.0% | 8.0% | 8.0% | 4.0% | 30.0% |
| Baltimore | 0.0% | 0.0% | 0.0% | 0.0% | 45.5% |
| Portland | 7.7% | 7.7% | 7.7% | 7.7% | 23.1% |
| Chicago | 0.0% | 0.0% | 0.0% | 0.0% | 20.0% |
| 19 Markets | 7.2% | 9.4% | 12.3% | 6.1% | 39.7% |
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* Note: Redfin publishes its Bidding Wars report on a quarterly basis. Our next Bidding War report will be released in July.
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