Competition dipped slightly ahead of the holidays, but remained above 50% for the seventh-straight month amid record-low mortgage rates and relocations.
Nationwide, 53.6% of home offers written by Redfin agents faced competition in November. While that’s down from a revised rate of 58.5% 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.
An offer is considered part of a bidding war if a Redfin agent reported that it received at least one competing bid.
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% 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%.
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.”
Minneapolis had a lower rate of competition than any other metro area in this analysis, with 34.6% of Redfin offers facing bidding wars in November. Also in the bottom five were Chicago (36.4%), Tampa, FL (37.1%), Houston (37.3%) and New York (37.6%).
“There’s been a noticeable slowdown over the last couple of weeks, possibly due to the rise in coronavirus cases, Thanksgiving and cold weather” said Minneapolis Redfin agent James Garry. “Move-in ready homes that are in the first-time homebuyer range of up to $350,000 are still getting into bidding wars, but we’re starting to see other listings get stale. Buyers are beginning to make contingent offers that sellers are actually entertaining, which has been unheard of over the last year.”
A recent Redfin analysis found that new listings and pending sales are growing at a slower rate in U.S. counties with more coronavirus cases per capita.
Condos Were the Least Likely to Face Bidding Wars
Condos were the least likely to encounter competition in November, with 38.3% of Redfin offers facing bidding wars. That compares with 48.7% of offers for townhouses and 57.3% 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.
Bidding-War Rates By Metro Area, November 2020 and October 2020
To be included in this analysis, metros must have had at least 25 offers written by Redfin agents from Nov. 1, 2020 to Nov. 30, 2020.
|Metro Area||Share of Redfin offers that faced bidding wars in November 2020||Share of Redfin offers that faced bidding wars in October 2020|
|San Diego, CA||75.3%||75.9%|
|San Francisco / San Jose, CA||65.8%||71.9%|
|Los Angeles, CA||59.5%||62.5%|
|Salt Lake City, UT||56.0%||77.6%|
|Las Vegas, NV||41.3%||38.2%|
|New York, NY||37.6%||50.7%|