According to a report by Redfin, the arrival of spring has brought with it a surge in bidding wars. Specifically, Redfin reports that just shy of half of its offers (41%) came accompanied by rival bids.
This uptick in competition among potential buyers comes as no surprise, as according to experts, the lack of housing supply that has arisen from the current coronavirus pandemic has only served to fan the flames, heating up the demand. The report further divulges that this 41% statistic shows the national average for the Redfin offers seen in the four weeks leading up to May 10. Also, a number of cities experienced an even higher percentage (more than 60%) of bidding wars when buyers were placing offers.
The reason that many homeowners are holding off on selling their properties—creating the housing supply shortage—is that the economic uncertainty that plagues this current era is not really showing any signs of an exact end date.
According to Redfin, these bidding wars are especially prevalent in the niche of single-family homes that are in the more popular locations and which have price tags that fall below the $1 million mark. While this lack of supply is substantial, it is not a new issue. Redfin’s reports point to the fact that the number of new listings had actually hit its lowest point during the second week in April, with a 50% year over year decline recorded.
Redfin Lead Economist Taylor Marr shared his insights on the current state of things: “Demand for homes has picked back up after hitting rock bottom in April, and that uptick paired with a lack of supply is a recipe for bidding wars. Homebuyers are getting back out there, searching for more space as they realize using their home as an office and school may become the norm. But sellers are still holding off on listing their homes, partially due to economic uncertainty and concerns of health risks. In some hot neighborhoods, there may only be one or two homes for sale, with multiple homebuyers vying for them.”
Redfin agent Crystal Zschirnt also chimed in, sharing her experiences: “During the first week of May, one of my clients made an offer on a house that ended up with 17 total offers. The only homes that are sitting on the market without multiple offers are overpriced. The fierce competition is due to low inventory.”
Zschirnt added: “Sellers in my area aren’t listing their homes at nearly the same rate they did before the pandemic, partly because they don’t want potential buyers walking through their homes, particularly people who aren’t seriously searching or aren’t yet qualified.”