Redfin reported [1] that more than half of its offers faced competition in June. Specifically, 54% of home offers placed by the real estate agency’s representatives faced bidding wars. This marks the second consecutive month that the bidding-war rate for new home purchases has been on the rise.
This competition can be attributed to the continued tightening and limited supply of homes for sale, as well as the steadily plummeting mortgage rates now available for home loans. Among these bidding wars, Redfin realtors report that many included multiple bids versus just two hopefuls vying for properties. Also, single-family homes and townhouses were reported as being far more likely than condos to receive these multiple bids.
Some might be surprised by this activity, especially considering COVID-19 spreading across the nation, and the unpredictable and hard-hit economy that comes has arisen as a result.
Redfin Economist Taylor Marr commented on this almost surreal state that the housing industry now finds itself within: “Bidding wars continue to be fueled by historically low mortgage rates and fewer homes up for sale than almost any time in the last two decades. It’s like a game of musical chairs where only the best bidders get a seat. Both renters and move-up buyers who have held onto their jobs are vying for the small number of single-family homes on the market as they realize they need more space for their families.”
Regarding these afore-mentioned low mortgage rates, Redfin revealed that the average mortgage rate fell to 3.03% for the week ending July 9, marking the lowest 30-year fixed-rate ever recorded. As for the homes available for sale nationwide in June, that figure dropped 21.3% from just one year ago, marking its lowest level since at least 2012 (seasonally adjusted). Also of note is that the metro areas of Boston, San Diego, and Salt Lake City were revealed to be the most competitive markets at the moment.
Boston Redfin agent James Gulden commented on what he sees occurring in his local market: “This is the most competitive real estate market I can remember. There are multiple bids on nearly every property I see whether I’m representing the buyer or the seller. I’m seeing the most competitive in the suburbs, where homes are selling in a matter of days. Sellers don’t want homes to be on the market any longer than necessary because of COVID-19, so they’re setting offer deadlines, which create a frenzied, competitive atmosphere.”