The traditional year-end slowdown in homebuying was not evident during December, as Redfin reported 49.7% of the home offers written its agents involved bidding wars between prospective buyers.
Although December’s rate was down from the revised rate of 55.9% in November, it was also the eighth consecutive month where nearly half or more of Redfin offers encountered competition.
During December, homes listed between $1 million and $1.5 million were the most likely to be the target of bidding wars, with 60.3% of Redfin offers being fueled by this competition. Redfin also reported that 55.3% of homes listed between $600,000 and $800,000 and 34% of homes listed for less than $200,000 were subject to this form of financial duel. Redfin noted that competition for high-end homes was due to many affluent Americans relocating during the pandemic—sales of luxury homes soared by 61% during the fall, compared to the mild 7% increase in sales of affordable homes.
Single-family homes were the most likely property type to attract bidding wars last month, with 53.6% of competitive offers based in this sector. In comparison, 46.1% of townhouse offers and 33.9% of condo offers were subject to bidding wars.
Of the 24 metro areas analyzed for this study, Redfin found the Salt Lake City metro area had the highest bidding-war rate with 75.6% of offers facing competition. Other metros where bidding wars raged were San Diego (74.5%), San Francisco/San Jose, at 67.4%. Seattle (65.3%) and Denver (58.4%) rounded out the top five.
“The housing market is unseasonably hot,” said Redfin Chief Economist Daryl Fairweather. “It’s behaving like it normally does in the spring, with plenty of demand from homebuyers. Typically, the vast majority of homes for sale in December are homes that have been sitting on the market because they're overpriced or there's a problem with the property. This December, with so many Americans moving, scores of desirable homes hit the market—but not enough to satisfy insatiable demand from homebuyers. The result? Fierce bidding wars.”