Bidding Wars, Competition to Heat Up in 2020

One of the many predictions by Redfin for 2020 is that the housing market will be more competitive in 2020 and low mortgage rates will cause bidding wars to rebound. 

Redfin states low mortgage rates will continue to strengthen homebuying demand, but the lack of new homes for sale and homeownership tenure increasing will lead to fewer homes being available in 2020 that in the past five years. 

Bidding wars will rebound in Q1 2010, Redfin states, forecasting one in four offers will face bidding wars in 2020, compared to just one in 10 in 2019. 

Annual price growth is predicted to increase by 6% in the first half of the year—stronger than the 2% growth recorded in the first half of 2019.

“Supply and demand will become more balanced later in the year as more listings of new and existing homes hit the market, allowing price growth to moderate to 3%,” the report says.

Redfin reported earlier this month that just 10% of offers written by Redfin agents in October faced competition. This is down from 39% last year and now at a 10-year low. 

California was home to four of the top-five markets where bidding was most common: San Francisco (34.8%); San Jose (20.5%); San Diego (15.6%); and Los Angeles (13.7%). Philadelphia, Pennsylvania, concluded the top-five at 13.8%. 

While San Francisco and San Jose reached new peaks in 2019 during October, the competition had cooled since 2018, when the bidding-war rate was 58.1% and 64.9%, respectively.

Also predicated by Redfin is for Charleston, South Carolina; and Charlotte, North Carolina, will lead the nation in home-price growth. Redfin states these two markets are seeing a growing number of migrants from expensive markets. 

Charleston recorded a 104% year-over-year increase in the number of Redfin users looking to move there in Q3 2019. Charlotte saw a 44% increase from last year. 

Both markets are also growing, as Microsoft is spending $23 million to expand its Charlotte campus. Charleston’s new Volvo plants is expected to add thousands of jobs.