As mortgage rates and housing inventory continue to hit record lows, potential homebuyers face an increasingly competitive environment. For the third consecutive month, Redfin said that more than half of its home offers faced competition in July.
Last week, average U.S. mortgage rates for a 30-year fixed mortgage fell to an all-time low of 2.88%, according to Freddie Mac, and according to the National Association of Realtors, inventory of homes on the market fell to a four-month supply in June.
“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,” said Redfin Chief Economist Daryl Fairweather.
Redfin said that 56% of single-family homes faced competition, followed by 54% of townhomes and 42% of condos.
The most competitive market was Salt Lake City, again, where 75% of Redfin offers had competition. Behind Salt Lake City sat San Francisco/San Jose, at 67% and San Diego at 65%.
The metro that saw the lowest rate of bidding wars was Las Vegas, where only 32% of offers had competition last month. Not too far behind was Miami with 36% and Chicago with 40%.
“At the same time, we may still be in the early innings of the pandemic migration wave,” Fairweather said. “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.”
Price-wise, homes between $400,000 and $500,000 were most likely to be in a bidding war, as 56% of these priced homes had competition. Meanwhile, just 46% of offers for homes listed above $1.5 million received multiple bids in July.