Bidding wars boom as homes spend as little as 4 days on the market

Record low housing supply and interest rates continue to fuel the firestorm of buyer competition.

Although the number of bidding wars slid from the month before, in keeping with the typical seasonal decline, September was the fifth straight month in which over half of homes for sale faced bidding wars, according to Redfin.

About 56.3% of U.S. properties underwent bidding wars in September, down from August's revised rate of 59.1%. But the competitive share once again quintupled the year-ago rates: in September 2019, only 11% of home sales underwent bidding wars.

"Homebuyers are still sweating as they navigate what remains an unseasonably hot seller's market," Redfin Chief Economist Daryl Fairweather said in the report.

September featured the first housing market to face an 80% share of bidding wars since San Jose, Calif., did so in September 2018. A staggering 81.1% of Salt Lake City listings faced bidding wars, followed by 69.1% in San Diego and 67.4% in the combined statistical area of San Francisco-San Jose. Washington, D.C., Minneapolis, Portland Ore., and Austin, Texas, also had bidding war shares over 60%. Among the 24 largest metros, Tampa, Fla., had the lowest competition at 26.3%, trailed by 38% in Miami and 41.4% in Raleigh, N.C.

While the country as a whole has an inventory shortage, Salt Lake City's is especially constrained. Seasonally adjusted for-sale homes in Utah's capital fell by 50% annually in September compared to 22.8% nationally. Exacerbated by the fact Salt Lake City homeowners had the longest average tenure, "the pandemic has likely encouraged residents to stay put for even longer," according to Fairweather.

A separate report from Zillow shows the heightened competition led to a plunge in days on market. Listings only spent an average of 16 days on the market in September, a drop from 17 days in August and 28 days in September 2019.

In the 50 largest markets, homes in Cincinnati, Columbus, Ohio, and Kansas City, Mo., posted the lowest median days on market at four. Salt Lake City didn't fall far behind at six days.

While sales in every price range sped up year-over-year, cheaper homes went fastest due to large swaths of first-time homebuyers entering the market. Entry-level properties — between $186,000 and $260,000 — sold in 14 days, down six days from September 2019. The middle market — between $260,001 and $344,000 — followed at 16 days and the bottom fifth — $185,999 and below — went under contract in 18 days.

"The buying season we're seeing this fall more closely resembles peak market activity we'd see in the spring in a typical year," said Zillow Senior Economist Chris Glynn. "It remains to be seen whether the 'traditional' buying season continues to be pushed back because of COVID-19 and activity will taper off in coming months, or whether historically low inventory and continued strong demand mean homes will continue to sell incredibly quickly through the rest of the year."