Home-buying Competition Picks Up in January, Still a Far Cry From Last Year’s Frenzy
58.1% of Redfin Offers Faced Competition in January, Down From 70.4% Last Year
Other findings include:
Multiple Offers
* Competition data is preliminary and subject to change.
Bidding wars across Redfin’s 22 markets increased in January for the first time since the peak of the 2013 home-buying frenzy in March 2013. Redfin agents faced competition in 58.1 percent of offers they wrote in January, up from 52.8 percent in December but a far cry from the 70.4 percent recorded last year. January often brings a resurgence of bidding wars, after the holiday lull and as new homebuyers enter the market in the new year.
This lower level of competition is just another sign that limited supply and higher prices are hindering demand. Just after the number of homes for sale hit a four-year low in January, we reported a soft start to 2014 in terms of yearly growth in Redfin clients making offers. With home prices now 30.9 percent higher than they were two years ago, the allure of “getting a deal” has faded. And for those who are simply frustrated with a lack of inventory, patience may be a virtue. Redfin listing consultations and requests for real estate photography services indicate that things may begin to pick up. “In January, we saw a significant year-over-year decline in home photography and videography appointments,” said Matt Murphy, president of Boston Virtual Imaging, LLC. “But we’ve already had a distinct uptick in appointment requests for the second half of February, leading me to believe that sellers are just waiting a little longer this year to put their homes on the market.”
Redfin analysts expect competition to remain a prominent fixture in the early 2014 market, especially for well-priced homes in popular neighborhoods. In the coming months, softer demand and loosening inventory will likely prevent bidding wars from becoming as common or as fierce as they were last year.
Multiple Offers
- Month over month, competition increased across all markets covered in this report.
- Chicago was the only market to see a year-over-year increase in competition, with 42.6% of offers facing bidding wars, up from 41% in January 2013.
- Across 22 markets, 22% of homes sold for more than the seller’s asking price, but the average home still sold for 0.9% below the list price.
- San Jose and San Francisco were the only markets included in the report where the average home sold for more than its asking price. In San Jose, 53.3% of homes sold for higher than list price last month, with the average seller enjoying a premium of 2.9%. Meanwhile, 50% of San Francisco homes sold for more than their asking price, with the average purchase price being 2.1% above asking.
- Despite increased prevalence of bidding wars, all of the measured bidding war strategies were used less frequently in January than in December, except for all-cash offers. In January, 8.8% of successful Redfin offers were all cash, compared to 7.8% in December.
Table 1: Competitiveness by Market
| Market | Current Month | Prior Month | Prior Year | Sold Over Asking | Sale-to-List Difference |
|---|---|---|---|---|---|
| San Jose | 90.0% | 85.3% | 97.9% | 53.3% | 2.9% |
| San Francisco | 85.7% | 78.7% | 94.1% | 50.0% | 2.1% |
| Los Angeles | 76.0% | 73.6% | 85.2% | 22.2% | -1.7% |
| Orange County | 72.0% | 57.4% | 88.0% | 10.5% | -1.8% |
| San Diego | 67.5% | 56.0% | 79.8% | 25.9% | -0.5% |
| Boston | 53.9% | 31.1% | 62.3% | 7.7% | -4.0% |
| Washington, D.C. | 51.6% | 51.3% | 55.6% | 20.0% | -1.4% |
| Seattle | 50.0% | 40.3% | 67.4% | 20.3% | -0.5% |
| Chicago | 42.6% | 40.4% | 41.0% | 20.0% | -2.5% |
| Baltimore | 28.6% | 23.8% | 36.7% | 14.3% | -0.7% |
| 22 Markets | 58.1% | 52.8% | 70.4% | 22.0% | -0.9% |
Table 2: Features of Redfin’s Winning Offers – What Percent of Winning Offers…
| Market | All Cash | Waived Financing | Waived Inspection | Cover Letter |
|---|---|---|---|---|
| San Jose | 6.7% | 40.0% | 40.0% | 40.0% |
| San Francisco | 10.0% | 20.0% | 13.3% | 53.3% |
| Los Angeles | 16.7% | 5.6% | 0.0% | 44.4% |
| Orange County | 15.8% | 0.0% | 0.0% | 73.7% |
| San Diego | 0.0% | 0.0% | 0.0% | 51.9% |
| Boston | 0.0% | 7.7% | 0.0% | 38.5% |
| Washington, D.C. | 0.0% | 5.5% | 9.1% | 34.5% |
| Seattle | 11.9% | 5.1% | 15.3% | 13.6% |
| Chicago | 10.0% | 10.0% | 0.0% | 10.0% |
| Baltimore | 0.0% | 0.0% | 0.0% | 35.7% |
| 22 Markets | 8.8% | 7.8% | 8.1% | 35.9% |