When two or more buyers make offers on the same property it’s considered a bidding war. The seller usually accepts the highest and best offer among the multiple buyers along with terms they like as well. Over recent years this was the typical situation in Orange County depending on the price point. That’s when the housing market was unquestionably in a seller’s market and the inventory of homes was lower.
This is fantastic news for potential buyers. They no longer have to be concerned with competing against as many as 20 offers when the seller’s market was at its peak. In addition, there’s more homes for sale to pick from, and mortgage interest rates have been recently dropped. This is becoming a great time to buy a home.
The findings of a February 2019 report by Redfin reveals:
- Only 13 percent of offers written by Redfin buyer’s agents were in a bidding war. That number represents a 53 percent drop from the previous year.
- In every market where Redfin agents serve home values decreased.
- California housing markets that had the largest percentage declines in home bidding wars were: San Francisco (-64%); Los Angeles (-57%).
- One major California city is still among the most competitive and that’s San Diego; yet only one out of five offers by a Redfin agent had buyers that were involved in a multiple offer situation. That number is down by more than fifty-percent versus a year ago 1.
Meanwhile, since January 2019 housing supply has been increasing.
- According to the most recent RE/MAX National Housing Report, sales of homes have declined for six straight months and is the biggest increase in ten years.
• RE/MAX analyzed 54 different markets and it showed an average inventory rise of 6.4 percent.
On March 26th, additional evidence of home sales slowdown came out when the S&P CoreLogic Case-Shiller index showed home prices in Los Angeles and Orange counties rose 2.9% in January from a year earlier, but that was substantially lower than other months 2. In Orange County, sales dropped 17.1% and prices fell 1.4% to $700,000.
What is occurring is actually quite natural according to experts. Through the past few years, home prices went up quickly until they reached a price level that many buyers became unwilling to pay the high prices. Meanwhile, interest rates were rising and topped out in November 2018. Homes started getting less and less offers and did not sell as quick.
Inventory of homes is also climbing due to buyers sensing the market is near a top, and people don’t want to buy at the peak.
What does this data mean for home buyers?
It’s actually good news if you’re shopping for a home. There is less pressure for home buyers to accept a house without their desired features such as a large kitchen, a true bedroom with a closet, two-full baths, or a two-car garage.
Market conditions are in your favor get a home soon
Many experts agree: If you qualify, make the most of today’s housing market prices and purchase a home since multiple offers are way down. Real estate is a long-term investment. So if you come across the house you want, do it now.
Then again, make sure you’re in the right financial position to take advantage. Know what’s on your credit report and make sure there’s not any errors. Get pre-approved for a mortgage prior to searching for a home. Use an experienced real estate agent to achieve your goal.
Sources:
1. Orange County market slowdown – https://www.ocregister.com/2019/03/27/market-slowdown-lingers-as-february-home-sales-drop-12-corelogic-reports/
2. SoCal Home Prices: https://www.latimes.com/business/la-fi-southern-california-home-prices-20190327-story.html