The quantity of bidding wars in California and nationally simply continues to fall. Is this just a blip in a healthy housing market or something else?
Based on recent data from Redfin, only 12 percent of buyers went through a bidding war in May. This represents a 52 percent decline from the previous year. That is a big difference.
According to Daryl Fairweather, chief economist at Redfin, the decline probably won’t last very long because mortgage rates fell to yearly lows in June. Lower interest rates makes it more affordable for buyers to own a home.
It mainly depends on affordability and if the home is priced right instead of too high. Redfin claims they’ve noticed an increase in the numbers of home buyers searching for a home. They just aren’t making many offers.
Where bidding wars dropped off most
Bidding wars fell by 65 percent in San Francisco, which is the most of any city since June of 2018. However, once you dig into the data, approximately 28 percent of all offers in San Francisco had a bidding war last month. This number reflects homes with price points of $1 million and under. Buyers became more discerning and bid up less for homes above $1.25 million.
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The next city was San Jose with only 19 percent of offers having a bidding war in June. That’s a decrease of over 60 percent from June 2018.
In other California cities the rate of sales slowdown is smaller, but still considerable: San Francisco is lower by 15%; Los Angeles has dropped by 7%, Orange County and San Diego are slower by 6% and Riverside-San Bernardino is off by 5%.
Lots of listings today are contingent on the sellers locating an acceptable replacement property. Moreover, there’s numerous offers that come in with contingencies from the buyers on selling their property too.
As of the end of June 2019, the inventory of homes for sale in Orange County is 9,013 vs. 7,887 in June 2018.
From ReportsonHousing, Here’s how this homebuying lack of interest looks at the county level: recent results vs. a year ago and the five-year average for this time of year.
- Orange County: 1,771 listings added this year — compared to an average 2,335 increase — bringing the supply of homes to 7,600. This represents 19% more inventory in a year.
Escrows of 2,548 — down 2% in a year.
Times it takes to sell? 89 days vs. 73 a year earlier.