Redfin reports that real estate bidding wars have hit a 10-year low in the US housing market.
The Fall Real Estate Market 2019
Competition is dropping in the fall real estate market of 2019 as Redfin real estate agents report that only 10% of offers on homes written for their clients faced a bidding war. This is a drop of 39% from this time last year.
Market experts say that although mortgage rates have been dropping throughout the year, they saw a rise in October. And although property price acceleration has slowed down significantly in 2019, price growth is starting to gain momentum again. These two factors are making US homes less affordable for the average home buyer. This leaves fewer consumers in the housing market in a position to enter a bidding war over a house.
Another factor is the housing supply. The fall real estate market is usually accompanied by an increase in housing inventory, which is why some real estate investors see it as an opportune time to buy a house for investment. However, the number of homes for sale on the market is still lower than in fall 2018. And while lower supply can cause fiery bidding wars, a large percentage of property buyers in the US housing market is shopping in the lower-price range. And because affordability is an issue to begin with for these buyers, they are much less likely to enter bidding wars.
When it comes to the luxury housing supply, demand is lower and inventory is higher right now. So buyers in this price range have more options and can shop around rather than end up in a bidding war for a home.
Daryl Fairweather, Redfin’s Chief Economist, commented on the drop in bidding wars, saying that competition in the real estate market is bound to increase again soon:
Although the number of homes for sale is dwindling and prices are rising, homebuyers don’t yet feel the pressure to engage in bidding wars. There are still homes on the market where sellers are willing to accept offers below list price, so buyers figure why get involved in a price escalation when there are still deals out there to be found. But as the number of homes for sale continues to decline, buyers will become more competitive.
A Different Story for Local Housing Markets
The real estate trends outlined above are for the general US housing market. However, real estate trends vary from one market to another.
While markets like the Miami real estate market, Atlanta real estate market, Las Vegas real estate market, and the Chicago real estate market are seeing a drop in bidding wars (on less than 10% of offers), other markets are still seeing competition.
In the San Francisco real estate market, around 35% of offers faced bidding wars. Even in this hot market, that was a drop of 58% from the same time last year.
Other housing markets where bidding wars are happening on more than 10% of offers on homes for sale include:
- Los Angeles real estate market
- Philadelphia real estate market
- Phoenix real estate market
- Boston real estate market
Take Advantage of the Real Estate Market Now Before It Heats Up Again
Now may be the last chance in the foreseeable future for buyers to win a home without facing a bidding war.
Fairweather and other experts say that while the real estate market has currently cooled down in terms of competition and bidding wars, next year may see a shift. It’s likely that the US real estate market will heat up again into a hot seller’s market if mortgage rates remain low as the shortage in supply continues.
As a real estate investor, now is the best time to invest in real estate. You can still find good deals on either end of the price range and you are likely to snatch up an investment property without having to deal with multiple offers or endless bidding wars. Just be sure that you don’t jump in head first- analyze real estate deals and perform a thorough investment property analysis using the right data and tools to make sure you are really getting a good deal this year.
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