Good news for home buyers: Bidding wars are at the lowest point in a decade. But that could be short-lived.
In one closely watched industry index measuring bidding wars, just 10% of offers written by real estate professionals with the brokerage Redfin faced competition from other buyers in October, down from 39% a year earlier.
However, economists point to low mortgage rates and a shortage of homes for sale that will likely heat up buyer competition for properties and usher back bidding wars next year.
“Right now, there are fewer homes for sale than we usually see this time of year, and sales are picking up thanks in part to low mortgage interest rates,” says Daryl Fairweather, Redfin’s chief economist. “All of the pieces are in place for bidding wars to become more common and for the housing market to shift back toward the seller’s favor next year. Now may be the last chance in the foreseeable future for buyers to win a home without facing a bidding war.”
Bidding wars were the most common in October in California markets, led by San Francisco (34.8% of offers faced a bidding war), San Jose (20.5%), San Diego (15.6%), and Los Angeles (13.7%). Philadelphia rounded out the top five at 13.8% of offers last month.
While nationally bidding wars are down, they did hit new highs for the year in San Francisco and San Jose markets. Bidding wars rose in these metros at a time of year when usually the market cools, Redfin economists note. Still, both markets’ bidding war rates are well-below a year ago, in which they stood at 58.1% in San Francisco and 64.9% in San Jose.
Source: “National Bidding War Rate Hit a 10-Year Low in October,” Redfin (Nov. 13, 2019)