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48 | M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Trouble Brewing in Seattle Housing Market? Once one of the most competitive markets in the nation, Seattle now has a bidding-war rate below the national average. J ust 10% of offers written by Redfin agents faced a bidding war in October— down from 39% last year and now at a 10-year low. California was home to four of the top-five markets where bidding was most common: San Francisco (34.8%); San Jose (20.5%); San Diego (15.6%); and Los Angeles (13.7%). Philadelphia, Pennsylvania, concluded the top-five at 13.8%. While San Francisco and San Jose reached new peaks in 2019 during October, the competition had cooled since 2018, when the bidding-war rate was 58.1% and 64.9%, respectively. "There was a lot of hype earlier this year in the Bay Area around some big IPOs," Palo Alto Redfin agent Kalena Mashing said. "But we haven't seen that hype trans- late into a hot market, regardless of how well the IPOs did. Really, it's not the IPO money making the market hot, it's the perception that the IPO money could make the market hot that has really driven the local housing market this year." Redfin Chief Economist Daryl Fairweather said the unseasonal uptick in competition during the month could be a sign of things to come. He said there are fewer homes for sale, but home sales are rising due to low mortgage inter- est rates. "All of the pieces are in place for bidding wars to become more common and for the housing market to shift back toward the seller's favor next year," Fairweather said. "Now may be the last chance in the foreseeable future for buyers to win a home without facing a bidding war." One of the housing market's biggest casualties has been Seattle, which saw its bidding-war rate fell to 8.8%, which is below the national average of 10.1%. Last year, Seattle was among the most competitive markets in the nation. "Homebuyers in Seattle know that in the current market they don't necessarily have to go through the emotional heart- burn that comes with bidding wars," Seattle Redfin agent Jessie Boucher said. "Even though there aren't a ton of homes for sale right now, buyers are able to preserve their contingencies and maybe even get a great deal." Miami, Florida, was the nation's least competitive market, with just 3.7% of offers facing competition. Of the major markets studied by Redfin, 13 had a bidding-war rate below the national average. HELOCs Below $400B for the First Time Since 2004 Since peaking at $714B in 2009, a report says consumers are "remembering the lesson" from the Great Recession. A study by the Urban Institute states that while mortgage debt is at its highest-recorded level ($9.4 trillion), outstanding HELOC debt during Q2 2019 was less than $400 billion for the first time since 2004. HELOC debt peaked at $714 billion in 2009, and the decline of HELOC reveals "high-risk aver- sion" among lenders and consum- er awareness. The U.S. housing market has a total value of $29.1 trillion—sig- nificantly higher than the market's pre-value crisis of $24.1 trillion. "The low level of cash-out refinancing and HELOC debt today suggests that both banks and consumers are remembering the les- sons from the past, contributing to a stable and secure housing market overall, and offering the housing market a substantial cushion in the event of a recession or an economic downturn," the report states. The 20 largest banks account for more than half of the total HELOC volume since 2003. Aiding to the decline is the lack of volume of cash-out refinances. Between 2003 and 2007, the total amount of cash-out refinances averaged $223 billion. Since 2008, the cash-out refi- nance volume has averaged $52 billion annually, ranging from $25 billion in 2014 to $96 billion in 2008. Cash-out refinance volume reached $87 billion in 2018, and it is on a slower place during the first three quarters of 2019. Insider reported last month that the number of HELOCS had declined by half since 2008. Bloomberg reported that this change in mentality is hurting banks, which were once counted on by homeowners taking loans as a source of revenue. The report added that at Bank of America, HELOCs produced $552 million of interest income during Q 3 2019—down almost 70% from a decade ago. Insider says that the volume of HELOCs doubled in the years leading up to the financial crisis, as homeowners could borrow against their homes to boost con- sumer spending. According to data from the New York Federal Reserve, the number of HELOCs has fallen by nearly half over the past decade. In 2016, just 4% of homes had an open home equity line, which is down 10% during the 2000s.