For the third consecutive month, bidding wars took place on more than half of home listings, according to Redfin.
As housing supply severely lagged home buyer demand, 54% of properties underwent bidding wars in July with some metro areas peaking at 75%. While it's a slight drop from June's revised rate of 56%, July’s bidding wars nearly quintupled the 11.2% of properties receiving multiple offers from the year before.
The steepest competition came in Western housing markets. A staggering 75% of homes for sale in Salt Lake City underwent bidding wars in July, followed by shares of 67% in the San Francisco-San Jose area and 65% in San Diego.
"You'd never know that we're in the middle of a pandemic. It's as hot a seller's market as I've ever seen," Greg Mathers, a Redfin agent in the San Francisco area, said in a press release. "One of my clients recently bid $100,000 over a home's asking price and only had the eighth-highest of 15 offers. It's coming down to how much money you can throw at a house and how many contingencies you can waive."
Mortgage rates that are continuing their fall to new lows boosted affordability to 4-year highs, stoking buyer interest further. It's forcing buyers' hands to place bids without physically seeing the properties.
"Bidding wars may slow down if interest rates tick up again, which could happen if we get good news about a coronavirus vaccine or more clarity around the outcome of the upcoming U.S. presidential election," said Redfin chief economist Daryl Fairweather. "At the same time, we may still be in the early innings of the pandemic migration wave. If coronavirus cases continue to climb, more employers will likely make flexible remote work policies standard procedure, which will drive further migration out of large, expensive cities. As a result, we may see bidding wars gain more traction in suburban areas and small towns."
Demand, particularly for first-time buyers, should stay frothy in the foreseeable future. Millennials make up the largest demographic of home shoppers and that could create a boom in purchase activity.
"COVID-19 added rocket fuel to two macro housing trends — the pent up demand for entry-level housing and the increasing digitization of the homebuying process," Brett Siegal, founder of Chicago-based fintech Ruuster, said in a statement to NMN. "In just two months since the launch of our public beta, we've had thousands of first-time millennial homebuyers come to our platform, far exceeding our early traffic plans. From our limited vantage, these are all leading indicators that there are legs to this demand that will continue in the coming months.
