Redfin: Bidding war competition drops to 10-year low in October

Mortgage & Real Estate

Although
the nation’s low-interest rates continue to drive purchasing demand, a report
from Redfin indicates America’s
bidding competition weakened in October. 

According to the
company, 10% of purchasing offers made on its site faced a bidding war during
the month. Not only is this percentage down from last year’s rate of 39%, but
it also marks a 10-year-low.

Despite October’s cooling,
Redfin notes the rate of bidding wars in San Francisco and San Jose hit new
highs for the year, coming in at 34.8% and 20.5%, respectively.

That being said,
both markets experienced an annual decline as bidding war rates were still well
below last year’s levels of 58.1% and 64.9%, according to the company.

Redfin attributes
the Bay Area’s annual decline to lackluster results following the launch of
several big tech stock IPOs, including Uber, Lyft and Slack,
which the company claims weren’t as hot as many expected earlier in the year.

“There was a lot of hype earlier
this year in the Bay Area around some big IPOs,” said Redfin agent Kalena
Mashing. “But we haven’t seen that hype translate into a hot market,
regardless of how well the IPOs did.”

Nevertheless,
Daryl Fairweather, Redfin’s chief economist, claims the Bay Area’s unseasonal monthly
uptick in competition may be a sign of things to come elsewhere.

“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. 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,” said Fairweather. “Now maybe the last chance in the foreseeable future for buyers to win a home without facing a bidding war.”

As for now, other West Coast markets, including Seattle, Sacramento, and Los Angeles are still facing ease of competition.

During the month, Seattle, which had a
bidding war rate of just 8.8%, fell well below the national average and now sits
barely above the 10-year low set in July.

This is despite the fact that a year
ago it used to be among the most competitive markets, along with San Francisco
and San Jose, according to Redfin.

“Homebuyers in Seattle know that
in the current market, they don’t necessarily have to go through the emotional
heartburn that comes with bidding wars,” said Redfin agent Jessie Boucher.
“Even though there aren’t a ton of homes for sale right now, buyers are
able to preserve their contingencies and maybe even get a great deal.”

This
may be the case for homebuyers in Sacramento and Los Angeles, as both housing markets
experienced a significant easing of competition in October. In these metros, the
share of Redfin offers that faced competition during the month came in at 8.2%
and 13.7%, falling from 54.4% and 40%, respectively.

NOTE: Redfin’s
analysis is based on home offer and purchase data gathered from thousands of Americans
that bought homes with Redfin agents over the past five years.
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