Competition between would-be homebuyers is still high, but an increase in homes hitting the market in June brought some relief from bidding wars.
Per a recent Redfin study, 65% of home offers written by company agents in June faced competition, down from a rate of 72.1% in May and a peak of 74.1% in April. That’s still higher than the 56.8% bidding-war rate Redfin saw in June 2020, when the housing market was starting to rebound from a temporary standstill triggered by pandemic shutdowns, said Laura Sechrist Molenda, a Redfin real estate agent based in Southern California.
“The first half of this year was red hot,” Molenda said. “It was almost impossible to get an offer accepted. But recently, we’ve started to see buyers get cold feet. Two of my buyers just had their offers accepted because the sellers’ first buyers backed out. The market is still competitive, but buyers are more trepidatious than they were at the start of 2021, and less willing to pull out every stop in order to win.”
The housing market has been losing steam in recent weeks following months of relentless competition and surging prices, Molenda said — driven by an intensifying housing shortage and a pandemic moving spree made possible by remote work.
“Buyer fatigue is likely one factor pushing down the competition rate, with some house hunters moving to the sidelines after losing bidding war after bidding war or getting priced out,” she said.
The housing market is extremely competitive right now. Here is a homebuyer’s guide to navigating bidding wars and low housing supply.
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An improving supply situation may also be making a difference, with new listings up 4% year over year — meaning more properties are hitting the market for buyers to bid on.
In 2018-2019, total housing inventory was in the range between 1.52 million and 1.92 million, and that level of inventory helped to drive real home-price growth in 2019 into negative territory briefly. Existing home sales during those years stayed in the monthly sale range of 4.98 million to 5.61 million homes, according to the National Association of Realtors.
Then the pandemic hit, and after eight months of consecutive gains spanning 2020 and 2021, the consequences of low home inventory finally caught up with the housing market in February 2021.
Currently, Sarasota, Florida, has the highest rate of bidding wars of the 52 U.S. metropolitan areas in this analysis, with 87% of offers written by Redfin agents facing competition in June. Next came Charleston, South Carolina, at 82.9%, and Reno, Nevada, at 80%. Charlotte, North Carolina, and Kansas City rounded out the top five, with bidding-war rates of 78.9% and 78.6%, respectively.
Spokane, Washington (78%), Sacramento, California (77.4%), Grand Rapids, Michigan (76.9%), Greenville, South Carolina (73.9%), Austin, Texas (72.9%), Boston (71%) and San Diego (70%) also had bidding-war rates at or over 70%.
“It’s still really competitive when there’s a lower-priced home in a very sought-after area,” said Kristi Miller, a Redfin agent based in Seattle. “But bidding wars are starting to slow for mid- and higher-priced homes.”
Redfin agent Shauna Pendleton, based in Boise, Idaho, said buyers are “exhausted.”
“They’re not buying out of desperation anymore now that there are more homes to choose from,” Pendleton said. “They’re no longer snapping up homes that would require thousands of dollars of upgrades. They’re also just busy, enjoying summertime travel and getting ready for back-to-school season.”