Potential homebuyers should be prepared for a fight now more than ever.
Seventy percent of home offers written by company agents in January saw competition in the form of at least one rival offer, according to a report from Redfin. That’s the highest bidding war rate Redfin has recorded since it began tracking the data in April 2020.
The figure is an increase from the 67.7 percent reported in December and 61 percent reported in January 2021.
Declining inventory and rising mortgage rates are two major culprits for the surge in competition as homebuyers look to make their move before it becomes prohibitively expensive.
“Rising mortgage rates are intensifying an already-severe shortage of homes for sale because buyers are feeling more urgency to buy while homeowners are feeling less urgency to sell — an imbalance that’s fueling an increase in competition,” said Redfin chief economist Daryl Fairweather.
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At the end of January, the average 30-year fixed mortgage rate was 3.55 percent. The figure has soared in the weeks since: Mortgage Bankers Association put the average at 4.06 percent for the week ending on Feb. 18.
Asking prices jumped 16 percent year-over-year to a new high and new listings dropped 8 percent to a new low in the week ending on Feb. 13, according to Redfin. As competition has increased and inventory has decreased, offers are spending less time up in the air; a record 57 percent of homes under contract had an accepted offer within two weeks.
Competition was at its most heated for townhouses, where 72.6 percent of Redfin offers encountered competition in January. That was followed by single-family homes (70.6 percent), condos/co-ops (62.9 percent) and multifamily properties (62.7 percent).
Of the 40 metros studied by Redfin, competition was hottest in Spokane, which sported a bidding war rate of 83.3 percent last month. Second place belonged to Sacramento (80.4 percent), while Seattle finished third (79.7 percent).
Bidding wars were a common feature in many other major metros too. San Francisco/San Jose had a bidding war rate of 76.5 percent, up from the previous month though down from 79.6 percent year-over-year. In Austin, the rate was 75.6 percent, up from 56.9 percent year-over-year.
Other major metros experiencing high competition rates in January include Los Angeles (65.2 percent), Miami (61.6 percent), Chicago (60.3 percent) and New York (54 percent), which had the second-lowest of any of the 40 metros, only ahead of Cincinnati.