Home buyers in the U.S. are facing increasingly fierce bidding wars, but even as prices rise and competition heats up, they’re not giving in.
A new survey by the National Association of Home Builders last week found that around 40% of prospective home buyers have been unable to purchase one because they keep getting outbid, CNBC reported. One year before, the main reason people couldn’t find a home to buy was due to unaffordable prices.
A second survey by Redfin found that 56% of its agents said they’ve faced a bidding war when making offers on behalf of their clients. It seems that bidding wars occur most frequently on higher priced homes in the $800,000 to $1 million region, Redfin reported.
Redfin’s chief economist Daryl Fairweather said he expects bidding wars to become more common this year, involving even more buyers.
“The best thing buyers can do is prepare: Prepare to see homes quickly as soon as they hit the market; prepare by talking to a lender and getting preapproved; and prepare by talking to your agent about how much a home you like is worth so you can go into a bidding war with your strongest offer tactics, but know when to back away if the price escalates more than you’re willing to pay,” he said.
The Redfin survey found that Salt Lake City, where 90.2% of all bids face competition, sees the most bidding wars, followed by San Diego (78.9% of all offers), the San Francisco Bay Area (77.1%), Denver (73.9%) and Seattle (73.8%).
CNBC said that bidding wars are being driven by a combination of record low mortgage rates and low inventories in most housing markets. The number of homes for sale in the U.S. was down 43% in January from one year ago, it said.
“Lower mortgage rates are making monthly payments for higher-priced homes more manageable,” Danielle Hale, realtor.com’s chief economist, told CNBC. “But finding a home that checks the right boxes amid limited supply, and saving up for the larger down payment needed with higher home prices, continue to be challenging, especially for first-time home buyers who haven’t accumulated home equity as prices have gone up.”