U.S. housing competition ramped right back up again in January, ending a short-lived reprieve for house hunters who encountered fewer bidding wars at the end of 2020, according to new data on Friday.
Competition began to wane toward the end of last year, as Covid-19 cases surged and the holiday season set in. But the lull is over, as the share of buyers who faced competing bids soared again in January, particularly for in-demand Sun Belt and West Coast cities, where listings are scarce, according to data from real estate company Redfin.
About 56% of buyers faced off against a competing bid in January, an increase from 52.5% in December, according to the listing portal.
“With so few new 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,” said Daryl Fairweather, chief economist at Redfin.
After a holiday interlude, buyers flooded the market in January, driving the median asking price on Redfin to a record high of $334,770, a 15% increase over a year ago, according to a separate report tracking the four weeks through Feb. 7. Pending home sales during that time increased 29% over a year ago.
Growing competition portends a difficult season ahead for buyers this spring. House hunters will need their ducks in a row to compete: Touring homes as soon as they list, getting preapproved for a loan, if financing, and knowing their price limit, Ms. Fairweather said.
Last month, bidding wars were most common in pricier segments. More than two in three buyers in the $800,000 to $1 million range faced a bidding war in January, the most of any price bracket. They were followed by buyers in the $1 million to $1.5 million range, 61% of whom bid against others.
Competition around the $1 million mark reflects who is buying these days, as white-collar workers with bigger budgets have flooded the market in search of more space during the pandemic.
Last month, it was basically impossible to buy a house in Salt Lake City, without upping the ante, as 90% of buyers encountered a competing bid. San Diego is also hot, with 79% of buyers facing off against a competitor.
“I’ve never seen demand like we have now on such a broad spectrum of prices,” said Charles Wheeler, a San Diego-based Redfin agent. “Now those more affordable homes, no matter where they’re located, are seeing steep competition, but so are homes in the $1.5 million to $2 million range. It’s partly because money is so cheap to borrow, even in the jumbo loan category.”
The greater San Francisco Bay Area, Denver and Seattle rounded out the top five most competitive regions in which to buy a house in January. Minneapolis, sixth on the list, started off the year with a surge in bidding wars, according to Redfin.
Though scarce, there were several major housing markets where competition actually declined in January. Only about a quarter of home buyers faced a competing bid in Atlanta, the least competitive market in January. Competition likewise waned slightly in Las Vegas and Washington, D.C.
Article Source: Mansion Global