The frequency of home supply wars has fallen to the lowest level this year, the latest sign that the housing market may be cooling down and returning to its usual seasonal patterns.
found that 58.8% of home offers written by the company’s real estate agents faced competition in August. That’s down from the 62.1% of the previous month and a peak of 74.3% reached in April. Redfin defines a bidding war as any situation where there are at least two competing bids for a home.
It represents the lowest level of competition for homes since December, when the bidding war rate was just 53.7%. In particular, the August 2021 figure is slightly below the level published a year earlier, a sign that the market may be returning to its standard seasonality.
Peak home buying season typically occurs in the spring and summer as families look to buy and move into a home before the start of the school year. But in 2020, that typical seasonal pattern was disrupted by the COVID-19 pandemic. Real estate activity came to a halt in the typically busy months of April and May amid stay-at-home orders to reduce transmission of the coronavirus that causes COVID-19.
Soon after, the nation’s housing market came to life, and something else. The pandemic prompted many families to consider moving to larger homes, as many Americans were suddenly able to work remotely.
At the same time, millennials were entering their prime home buying years. much, and the pandemic made home ownership a higher priority for those who were not adversely affected by the labor market downturn. On top of all that, historically low mortgage rates created even more demand, as people considering buying a home suddenly felt pressure to secure affordable financing before the opportunity wore off.
““Sellers continue to price their homes very high, but many buyers have had enough and are no longer willing to pay the huge premiums they had six months ago.”“
This sudden surge in demand was met with an extremely limited supply of homes for sale. Years of under-construction have meant the US is facing a housing shortage; Additionally, the pandemic led many sellers to postpone listing their homes for sale. As a result, the rate of bidding wars increased rapidly last summer and grew through this spring.
All of this competition has driven home prices to record levels in many parts of the country as double-digit percentage price appreciation became the norm. But now the number of bidding wars is on the wane, according to Redfin’s analysis. And those high home prices could be a big factor as to why.
“Sellers continue to price their homes very high, but many buyers have had enough and are no longer willing to pay the huge premiums they had six months ago. Instead of 25 to 30 deals on turnkey homes, we are now looking at five to seven, ”Nicole Dege, a Redfin real estate agent in Orlando, Florida, said in the report. In Orlando, the bidding war rate fell from 78.9% in July to 57.5% in August.
Redfin’s analysis noted that only 50% of homes sold above their list prices during the four weeks ending Sept. 5, down from a 55% peak in August. And the speed with which sellers accept offers has also been reduced.
Still, all real estate is local, and many markets show no signs of cooling. Raleigh, North Carolina, had the most competitive housing market in the country, according to the Redfin report, with 86.7% of homes seeing bidding wars in August, up from 71.3% the month before.
The next most competitive market was San Francisco-San Jose, California, followed by Tucson, Arizona and Cincinnati. Of the 10 most competitive markets, only two saw the bidding war rate drop between July and August: Charlotte, North Carolina, and San Diego.