Buyers are increasingly facing fierce bidding wars in their hunt for a home. Even as home prices surge and competition remain tight, house hunters are undeterred.
About 40% of potential buyers who’ve been searching for a home say they haven’t bought a house yet because they keep getting outbid, according to a new survey by the National Association of Home Builders. A year ago, the primary reason cited was unaffordable prices.
About 56% percent of Redfin real estate professionals reported facing a bidding war with their buyer offers in January. Bidding wars are occurring the most frequently with properties between $800,000 and $1 million, Redfin reports.
“With so few listings hitting the market, I expect bidding wars to become more common and involve even more potential buyers as we head into the spring homebuying season,” says Daryl Fairweather, chief economist at Redfin. “The best thing buyers can do is prepare: Prepare to see homes quickly as soon as they hit the market; prepare by talking to a lender and getting preapproved; and prepare by talking to your agent about how much a home you like is worth so you can go into a bidding war with your strongest offer tactics, but know when to back away if the price escalates more than you’re willing to pay.”
The areas facing the most bidding wars, according to Redfin’s survey of 24 markets, are Salt Lake City (90.2%); San Diego (78.9%); the Bay Area (77.1%); Denver (73.9%); and Seattle (73.8%).
Record low mortgage rates along with extra lean inventories are prompting the buying frenzy. The number of homes for sale was down 43% in January year over year, a record low, realtor.com® reports.
“Lower mortgage rates are making monthly payments for higher-priced homes more manageable,” says Danielle Hale, realtor.com’s chief economist. “But finding a home that checks the right boxes amid limited supply, and saving up for the larger down payment needed with higher home prices, continue to be challenging, especially for first-time home buyers who haven’t accumulated home equity as prices have gone up.”