Bidding Wars Climb in May as Coronavirus Intensifies Housing Shortage

SEATTLE, June 15, 2020 /PRNewswire/ -- (NASDAQ: RDFN) — 49.4% of Redfin offers faced competition in May, up from 43.9% during the prior month, according to a new report from Redfin (www.redfin.com), the technology-powered real estate brokerage.

While sellers are jumping back into the market as states across the country reopen, there remains a shortage in houses for sale, which is fueling bidding wars; the number of listings on the market in May was 18.9% lower than the same period last year.

"Bidding wars also jumped in May because homebuyers felt they were starting to get more clarity around where the economy was headed, with cities around the nation lifting stay-at-home orders. This gave house hunters more confidence to compete," said Redfin lead economist Taylor Marr. "But with coronavirus cases back on the rise in many states, only time will tell whether that confidence is sustainable."

Of the 24 metros in this analysis, 11 saw a majority of Redfin offers facing competition in May. That's up from eight metros in April.

Redfin agents say competition has picked up significantly in recent weeks with fierce bidding wars, many involving all-cash offers that are driving up prices.

Boston, Dallas and D.C. Were Among the Most Competitive Markets

The Boston metro area had the highest rate of competition, with 64.1% of offers written by Redfin agents on behalf of their homebuying customers facing bidding wars in May, up from 56% in April. It was followed by Dallas, at 60.8%. Washington, D.C. rounded out the top three, at 57%. The other metros where the bidding-war rate was above 50% were Salt Lake City, Denver, Seattle, Austin, TX, San Francisco/San Jose, Minneapolis, Los Angeles and Portland, OR.

"We're seeing a frenzy," Boston Redfin agent Delince Louis said. "Any home below $500,000 is receiving multiple offers; we just don't have the supply to meet the demand."

To be included in this analysis, metros must have had at least 50 offers written by Redfin agents from May 1, 2020 to May 31, 2020. An offer is considered part of a bidding war if a Redfin agent reported that it received at least one competing bid.

In Miami, just 28.6% of offers faced competition, the lowest rate of any market in this report. The metro with the second lowest bidding-war rate was also in Florida: Tampa, at 31.5%.

Detroit experienced the largest increase last month, with the share of offers facing competition climbing 26.5 percentage points to 50%. Michigan was one of the few states in the U.S. that did not deem real estate an essential service during the coronavirus outbreak, but it began to ease restrictions on the industry in early May, which likely explains the jump in Detroit's bidding-war rate.

Meanwhile, Las Vegas saw its bidding-war rate drop by 21.2 percentage points, making it the biggest decliner.

Single-Family Homes Were the Most Likely to See Bidding Wars

In May, 51.5% of offers for single-family homes faced competition, up from 45.6% in April. That compares with 48.7% of offers for townhouses and 38.8% for condos.

"People no longer want to share laundry or a yard," Louis said. "I listed a single-family home in Boston proper at the height of the coronavirus lockdown and it got 14 offers. 'Home' means more right now than ever, and we're seeing this new sense of urgency among buyers to find places with more privacy."

In some of the most competitive metros, including Boston and Seattle, agents said relatively affordable homes were the most likely to receive multiple offers.

"It feels like virtually every home between $300,000 and $500,000 gets into a bidding war now, whereas before the pandemic, it might've been closer to 50-50," said Brian Richards, an agent in Tacoma, WA, which is in the Seattle metro area. "And like never before, buyers are willing to pay above the appraised value."

Here's a metro-level look at bidding war rates in May compared with April:

To read the full report, please visit: https://www.redfin.com/blog/competition-increases-homebuyers-coronavirus-drives-housing-shortage.

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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