Bidding wars on homes in some of the hottest markets in the country have almost stopped, according to a Redfin report that looked at the offers written by its agents on behalf of their homebuying customers in January.
The report indicated that only 13 percent of these offers faced a bidding war, marking a steep decline from 53 percent seen in January 2018. In fact, Seattle and San Francisco—two of the most competitive markets last year—saw less than one in five offers facing competition. During the same period last year, both these markets saw bidding wars on seven to eight out of 10 offers.
A key reason for the cooling down of competition on homes, the report indicated, is the supply and demand of homes. It pointed out that the number of homes for sale are increasing even as homebuyers' demand is declining. It revealed that as of December, the number of homes for sale went up 5 percent from the year earlier, whereas the number of homes sold declined 11 percent during that same period.
As more homebuyers hear that the market is slowing down, they're waiting "until they find a home that can check more boxes," according to Kalene Masching, a Redfin agent in Palo Alto, California. "In general they are being more judicious as they think through their purchase. Meanwhile, many sellers have not yet recognized that the market has shifted."
Breaking down the areas that saw the biggest decline in homebuyer competition, the report noted that competition in the San Francisco Bay area fell 64 points in January, followed by Los Angeles with a decline of 57 points, and Seattle which saw competition decreasing by 54 points.
The markets that saw the smallest declines were Austin, where competition fell 11 points, Raleigh with a 13 point decline, and Chicago, which saw a 29 point decline in competition.
On the other hand, Portland, Denver, and San Diego were the most competitive housing markets in January. However, even these markets saw less than one out of five offers face a bidding war, the report indicated. The least competitive housing markets were Miami, Dallas, and Houston.