Bidding wars are back. After a slew of potential buyers started their homebuying journey early this year, they found that the sparse inventory is pushing home prices up—a disappointment to those tempted into the process by low interest rates. A majority of offers submitted by Redfin agents faced competition in January, and that tension is coloring the homebuying process, leading to even higher prices for buyers and the possibility of homebuyers losing out on their dream home despite initially being able to afford it. And though builders are ramping up construction, the housing shortage will be a long-term battle as inventory hit its lowest point in seven years.
A majority of offers submitted by Redfin agents faced competition in January according to a survey of more than 500 Redfin agents across the nation. Competition is spiking hard and early in 2020 and agents are reporting a flood of buyers as home supply sits at its lowest point in seven years, leading to a severe housing shortage in many areas.
“Low mortgage rates have brought buyers back to the housing market, but a lack of listings means buyers are having to compete with one another to secure a sale and lock in a mortgage rate,” said Redfin chief economist Daryl Fairweather. “This competition pushes up prices, which means that even though buyers can get a good deal on a mortgage now they are often paying a higher sticker price.”
The San Francisco Bay Area had the highest rate of competition, with agents estimating that more than 90% of the time there were multiple offers on homes their clients were bidding on—despite the fact that the median home price there is still well above $1 million.
Of the 24 markets where we received a significant volume of responses from our agents, homebuyers in all but five faced competition more often than not. The area that seemed least prone to competition was Greenville, SC.
