Although the nation’s low-interest rates continue to drive purchasing demand, a report from Redfin indicates America’s bidding competition weakened in October.
According to the company, 10% of purchasing offers made on its site faced a bidding war during the month. Not only is this percentage down from last year’s rate of 39%, but it also marks a 10-year-low.
Despite October’s cooling, Redfin notes the rate of bidding wars in San Francisco and San Jose hit new highs for the year, coming in at 34.8% and 20.5%, respectively.
That being said, both markets experienced an annual decline as bidding war rates were still well below last year’s levels of 58.1% and 64.9%, according to the company.
Redfin attributes the Bay Area’s annual decline to lackluster results following the launch of several big tech stock IPOs, including Uber, Lyft and Slack, which the company claims weren’t as hot as many expected earlier in the year.
“There was a lot of hype earlier this year in the Bay Area around some big IPOs,” said Redfin agent Kalena Mashing. “But we haven’t seen that hype translate into a hot market, regardless of how well the IPOs did.”
Nevertheless, Daryl Fairweather, Redfin’s chief economist, claims the Bay Area’s unseasonal monthly uptick in competition may be a sign of things to come elsewhere.
“Right now, there are fewer homes for sale than we usually see this time of year, and sales are picking up thanks in part to low mortgage interest rates. All of the pieces are in place for bidding wars to become more common and for the housing market to shift back toward the seller’s favor next year,” said Fairweather. “Now maybe the last chance in the foreseeable future for buyers to win a home without facing a bidding war.”
As for now, other West Coast markets, including Seattle, Sacramento, and Los Angeles are still facing ease of competition.
During the month, Seattle, which had a bidding war rate of just 8.8%, fell well below the national average and now sits barely above the 10-year low set in July.
This is despite the fact that a year ago it used to be among the most competitive markets, along with San Francisco and San Jose, according to Redfin.
“Homebuyers in Seattle know that in the current market, they don’t necessarily have to go through the emotional heartburn that comes with bidding wars,” said Redfin agent Jessie Boucher. “Even though there aren’t a ton of homes for sale right now, buyers are able to preserve their contingencies and maybe even get a great deal.”
This may be the case for homebuyers in Sacramento and Los Angeles, as both housing markets experienced a significant easing of competition in October. In these metros, the share of Redfin offers that faced competition during the month came in at 8.2% and 13.7%, falling from 54.4% and 40%, respectively.
NOTE: Redfin’s analysis is based on home offer and purchase data gathered from thousands of Americans that bought homes with Redfin agents over the past five years.
