According to a new Redfin report, 44.3% of Redfin agent offers faced competition in July, compared to a revised rate of 50.9% for the previous month and 63.8% for July 2021 (taking seasonal adjustments into account).
Homebuyer competition has declined for the sixth straight month, reaching the lowest share on record, except for April 2020—when the pandemic brought it to its lowest point.
Steady decline in bidding wars
The 36 metros included in Redfin’s analysis have a monthly minimum average of 50 offers submitted from March 2021 to March 2022 by Redfin agents. The chart below lists them by their bidding war rate from lowest to highest.
The typical bidding war involved 3.5 offers in July 2022—down from 4.1 in June and 5.3 in July 2021, according to data received from Redfin agents across the U.S.
According to the Redfin chart, Raleigh, NC, had the highest bidding war rate (63.8%), followed by Honolulu (63%), Providence, RI (60.5%), Philadelphia (60.4%), and Worcester, MA (54.8%).
Phoenix had the lowest bidding war rate (26.6%), followed by Riverside, CA (31.0%), Seattle (31.5%), Austin (31.7%), and Nashville (33.3%).
More Americans priced out of the market
Higher mortgage rates and inflation have priced more Americans out of the housing market (link ‘First-time homebuyers hit financial burden’), forced them to look for more affordable homes, or put their homebuying aspirations on pause. With fewer homebuyers shopping and making offers, competition has slowed.
Fewer offers mean days on market are up for active listings, leading to a rise in housing inventory—and more options for active home shoppers. Homebuyers also have more room to negotiate prices.
As a result, some sellers are lowering their asking prices. Each week, around 8% of listings on the market see a price cut—the highest percentage on record.
The market is wildly different than it was a few months ago. Buyers are competing with one to two other offers instead of four to eight. Some aren’t facing competition at all. There’s not the same sense of urgency.
For an extra shock, Malin added, “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. I haven’t written an over-asking offer in a month.”
Advice for sellers
While competition is still strong enough to favor sellers, the numbers suggest those scales are beginning to tip in the other direction.
With that in mind, sellers who set realistic prices and who make sure their homes are move-in ready—clean, tidy, and with updates that enhance their value—are more likely to see their homes sell quickly.
Buyers in this market are more likely to wait for a home that checks all their boxes.
Lowest competition rates in Phoenix, Austin, and Nashville
As mentioned above, Phoenix, Austin, and Nashville were among the five metros with the lowest bidding-war rate.
In Phoenix, a little more than a quarter (26.6%) of home offers submitted by Redfin agents encountered competition.
Many of the areas were pandemic migration magnets, which drove up housing prices. Combined with inflation and the increase in mortgage rates, those higher prices made housing cost-prohibitive for many of today’s homebuyers—hence the drop in competition.
Last year, the average out-of-town homebuyer moving to Nashville had $736,900 to spend on a home—28.5% more than the average local buyer—the widest recorded gap in out-of-towner vs. local resident buying power for U.S. cities.
Biggest declines in Orlando, Nashville and Sacramento
Orlando, FL saw the steepest decline in competition (44%) among the 36 metros in Redfin’s analysis—with 37.4% of home offers submitted by Redfin agents facing competition in July, compared to 81.4% in July 2021.
Next in line were Nashville with a 39.5% drop, Sacramento at -39%, Charlotte, NC at -36.4% , and Colorado Springs, CO at -34.3%.
Not a single metro area saw a year-over-year increase in its bidding-war rate.
Townhouses most likely to face bidding wars
Townhouses were the most likely property type to face bidding wars, with 43.5% of offers by Redfin agents facing competition in July. Next in line were single-family homes (42.9%), condos/co-ops (39.7%) and multi-family dwellings (38.9%).
Townhomes, which are typically smaller and cost less, have drawn more competition from homebuyers who’ve been priced out of the market for single-family homes.
Top takeaways for real estate agents
If you’re an agent in one of the markets seeing a low bidding-war rate or a steep decline in competition from a year ago, you’ve probably seen how this trend affects buyers and sellers in your community.
Less competition means your buyers have more options and more time to consider them. Help them make the right choices for them. Your sellers, in turn, will expect you to know how to market their homes to attract as many qualified buyers as possible.
