Housing Shortage Leads to Intense Competition Among Homebuyers

SEATTLE, Feb. 24, 2020 /PRNewswire/ -- (NASDAQ: RDFN) — A majority of offers submitted by Redfin agents faced competition in January, according to a survey of more than 500 agents across the nation in a new report from Redfin (www.redfin.com), the technology-powered real estate brokerage. Competition is spiking hard and early in 2020, and agents are reporting a flood of buyers as home supply sits at its lowest point in seven years, leading to a severe housing shortage in many areas.

"Low mortgage rates have brought buyers back to the housing market, but a lack of listings means buyers are having to compete with one another to secure a sale and lock in a mortgage rate," said Redfin chief economist Daryl Fairweather. "This competition pushes up prices, which means that even though buyers can get a good deal on a mortgage now they are often paying a higher sticker price."

The San Francisco Bay Area had the highest rate of competition, with agents estimating that more than 90% of the time there were multiple offers on homes their clients were bidding on—despite the fact that the median home price there is still well above $1 million.

Of the 24 markets where Redfin received a significant volume of responses from agents, homebuyers in all but five faced competition more often than not. The area that seemed least prone to competition was Greenville, SC.

In the Bay Area, the most competitive market in January, buyers are going to extreme lengths to win a home. "After missing out on one home due to a bidding war, my clients were much more aggressive on their next offer," said Redfin San Jose agent Jennifer Tollenaar. "In order to beat 24 other offers, they put 50% down, wrote a great letter to the sellers and removed all contingencies. This was on a home with a purchase price of over $1.7 million."

"In Phoenix, inventory is so low right now that one of my clients has run into bidding wars with more than 10 offers for three weekends in a row," said Arizona Redfin agent Thomas Wiederstein. "Offering well above listing price isn't enough in today's market. You have to do that, plus waive contingencies just to have your offer considered by sellers."

The most shocking story of competition came from Redfin Portland agent Meme Loggins, whose clients recently made an offer that was $8,000 above the home's $275,000 list price. "Ours was the second offer the sellers had received. Two days later we were competing with 30 other offers. This bidding frenzy took place on a mobile home that was pretty far out of the metro area and not even in great condition. It's getting crazy out there!"

It's not just the West Coast that's seeing competition explode. In Philadelphia, even homes that have been on the market for months are suddenly attracting bidding wars. "One home I recently helped my clients win had been on the market since June and hadn't been reduced in price since November," said Redfin Philadelphia agent Brenda Beiser. "When we looked at it in mid-January the agent told me there had been six other appointments the day before. By the time our offer went in that evening they had received two other offers."

A number of other Redfin agents shared similar stories of experiencing multiple offers in January on homes that had been on the market for months. This recurring theme is indicative of just how many buyers have suddenly come into the market, but without a corresponding increase in listings of homes for sale.

To read the full report, please visit: https://www.redfin.com/blog/homebuyer-competition-report-january-2020.

About Redfin
Redfin (www.redfin.com) is a technology-powered real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the consumer's favor. Founded by software engineers, Redfin has the country's #1 brokerage website and offers a host of online tools to consumers, including the Redfin Estimate, the automated home-value estimate with the industry's lowest published error rate for listed homes. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commissions. Redfin serves more than 90 major metro areas across the U.S. and Canada. The company has helped customers buy or sell homes worth more than $115 billion.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email [email protected]. To view Redfin's press center, click here.

SOURCE Redfin

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