Fewer homebuyers are facing even a single competing offer. And when buyers find themselves in bidding wars, the field is less crowded, according to a report from Redfin.
Well over half of the home offers written by Redfin agents in July faced no opposing bids, a continuation of a six-month pullback in the competition through which the company’s buyer clients have had to wade.
The Seattle-based real estate company reported on Friday, that 44 percent of the proposed purchase contracts written by its agents ended up in a multiple-offer situation, down from 51 percent the month before and 70 percent as recently as January.
It’s a dramatic scaleback that has returned bidding wars to their lowest levels since April 2020, when early shutdowns and uncertainty over the spread of the coronavirus briefly slowed the housing market to a crawl.
Even for those buyers who found themselves in a bidding war in July, the market became noticeably less crowded. The typical home in a multiple-offer situation had 3.5 offers last month, down from 4.1 the month before and 5.3 in July of last year, Redfin said.
“The market is wildly different than it was a few months ago,” Alexis Malin, a Redfin agent in Jacksonville, Florida, said in the report. “Buyers are competing with one to two other offers instead of four to eight. Some aren’t facing competition at all.”
As mortgage rates have risen from below 3 percent to above 5 percent this year, many buyers have been priced out of the market, and demand has declined as a result.
But many of Redfin’s clients, who remain on the hunt for a home in recent weeks, have felt empowered to make more buyer-friendly offers.
“Buyers have also started writing offers for less than sellers’ list prices — a reversal from the height of the pandemic, when homes were going for tens of thousands of dollars over asking,” Malin said. “I haven’t written an over-asking offer in a month.”
The swift one-eighty in bidding-war levels was most obvious in places like Orlando, Florida, where the share of home offers that faced competition was cut in half from 81 percent a year ago to 37 percent in July.
Similar annual declines in the share of offers that faced multiple bids were recorded in Nashville, Tennessee, from 73 percent last year to 33 percent in July; Sacramento, California, from 73 percent to 34 percent; Charlotte, North Carolina, from 71 percent to 35 percent; and Colorado Springs, from 71 percent to 37 percent.
With fewer homebuyers — and more selective ones — remaining on the market, homesellers in some areas are having to be careful once more not to overshoot when setting the list prices for their homes.
In the report, Redfin agent Brynn Rea said she tells her seller clients to focus once more on maximizing the appeal of the home before hitting the market.
“Sellers should make sure their home is move-in ready and not overpriced,” said Rea, who works in Spokane, Washington. “They should do everything possible to make their property pristine for the masses — invest in updates and make it feel fresh. Doing little things like replacing faulty faucets or painting walls will help sell a home more quickly.”