Competition's heating up for the home buying season
With inventory tight, bidding competition among potential homebuyers intensified in January and value appreciation is expected to increase in the coming months.
Roughly 80% of housing markets had competition on the majority of purchase offers in January, according to a survey of over 500 Redfin agents across the country.
"Low mortgage rates have brought buyers back to the housing market, but a lack of listings means buyers are having to compete with one another to secure a sale and lock in a mortgage rate," Daryl Fairweather, Redfin chief economist, said in a press release. "This competition pushes up prices, which means that even though buyers can get a good deal on a mortgage now they are often paying a higher sticker price."
San Francisco had the most competition to purchase a home during the month with 90% of listings receiving multiple bids. This pushed consumers to be aggressive with their bids and drove up prices. It was similar in Arizona.
"In Phoenix, inventory is so low right now that one of my clients has run into bidding wars with more than 10 offers for three weekends in a row," said Redfin agent Thomas Wiederstein. "Offering well above listing price isn't enough in today's market. You have to do that, plus waive contingencies just to have your offer considered by sellers."
Meanwhile, home values grew 3.8% year-over-year in January, according to Zillow. That rate had decreased 21 months in a row but the push and pull of supply and demand point to an upswing on the horizon. The median home value went to $245,193, up from $236,301 the year before. Available homes fell on an annual basis in January to 1.5 million from 1.63 million.