Bidding wars for Bay Area homes have scraped new lows, as buyer fatigue with high prices and stressful deals saturates most of the region.
About 1 in 7 San Jose homes faced competition in December, down from 1 in 5 the previous year, according to a study from Redfin. Roughly 1 in 6 homes in lower-priced Oakland drew a bidding match, slightly higher than the prior year.
The region remains the most competitive in the country, but local agents in core Silicon Valley cities report more homes selling for under listing price — a far cry from December 2017, when nearly 90 percent of Bay Area homes listed on Redfin drew multiple offers.
Redfin chief economist Daryl Fairweather said part of the down turn is seasonal, with sales traditionally slower during the holiday season.
"We'll probably see competition really heat up in the spring," she said. In the Bay Area, she added, "there really aren't very many homes for sale."
The Bay Area continues to feel the pressure from a steaming economy adding jobs and people, and a stagnant supply of homes and apartments. Bay Area job growth in November was 2.4% compared to the previous year, stronger than the 1.5 percent increase nationally, according to the Bay Area Council Economic Institute.
Although the competition between home buyers has chilled in the Bay Area, the region remains the most favorable in the country for sellers, according to Redfin. San Francisco, San Diego and San Jose were the top top three metros where home listings drew bidding wars.
Nationally, bidder skirmishes set a 10-year low, with only 9% of offers written by Redfin agents getting multiple bids above listing price.
Some of the cooling in Bay Area home sales comes from the rapid rise in prices in 2017 and 2018 pushing homes beyond the budgets of many would-be-buyers, Fairweather said. "Bidding wars are a psychological thing," she said. "Affordability plays a large role."
The median sale price for a home in the nine-county region in November was $803,200, according to Zillow, hitting $1.37 million in San Mateo County, $1.11 million in Santa Clara County, $863,400 in Alameda County and $651,400 in Contra Costa County.
The median sale price for existing homes peaked in May 2018 at $928,000, according to real estate data firm CoreLogic.
Local agents say demand remains strong, especially for entry-level homes.
San Jose agent Sandy Jamison said buyers are more particular about their purchases. The no-contingency, as-is contracts have been replaced by hard negotiations and punch-list demands from buyers.
Jamison, president of the Santa Clara County Association of Realtors, said final sales have generally been in line with listing prices. "If it goes over (the listing price), it's not by very much," she said.
Compass agent Mark Wong, based in Saratoga, saw mixed results in core Silicon Valley cities during the final two months of 2019.
Two homes recently listed in San Jose each received more than 20 offers, he said. A three-bedroom, two-bath home advertised for $1.2 million received 35 offers and sold in January for $1.53 million.
But in pricier neighborhoods, houses are more likely to sit as affluent buyers look for bargains. In the final two months of the year, 12 of 14 homes in Saratoga fetched less than the listing price, he said. Sellers were less willing to lower their asking prices in the upscale community, hoping for peak values their neighbors collected at the top of the market two years ago, he said.
"In general, the high-end of the market is kind of soft," Wong said.
Wong added that more affordable cities like Sunnyvale have become a popular destinations for home buyers just getting into the market. Home sales in more affordable cities are more likely to draw intense competition, he said. "It all depends on which area."
