MReport January 2020

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M R EP O RT | 43 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 ORIGINATION THE LATEST Not Worth Bidding On? Bidding wars took a backseat in 2019. C ompetition among homebuyers is trending lower, as Redfin found just 10% of offers written by agents faced a bidding war in November—a 29% annual decline and near a 10-year low for the fifth consecutive month. Redfin says the competition rate is expected to remain low through the end of 2019 and begin rising in early 2020. The competition rate nationally was 28.7% in November 2018 but has plummeted to 10.1%. San Jose, California, which saw more than 90% of offers face competition in 2017, is seeing just 10.8% of offers face competition. San Francisco remained the most competitive market with 30.3% of offers facing competition, which is down from October's 34% and November 2018's 53%. The month-over-month decline of 3.7 points was below the 2010-2018 average October-to-November decline of 4.6 points. "Almost every home for sale that is in a great location and priced competitively is still receiving multiple offers," San Francisco Redfin agent Miriam Westberg said. "One home we made an offer on last week had 25 other offers. However, homebuyers definitely feel like they can be more selective this year, so homes that don't check every single box may only get a single offer, and tend to take a longer time to sell." No market had a bidding war rate higher than 17% and the competition rate saw its lowest numbers in five years in November in Chicago (5.2%); Houston, Texas (1.4%); Portland, Oregon (6.6%); and Los Angeles (11.3%). Houston was the nation's least competitive market and saw its bidding war rate fall from 8.4% in October and 21.7% in November 2018. "Even though the number of homes for sale has been falling faster than we normally see this time of year, buyers just aren't feeling any sense of urgency right now," Redfin Chief Economist Daryl Fairweather said. "The supply and demand data still says that it's a seller's market, but homebuyers working with Redfin agents in places like Portland and Denver are feeling and acting like they're in control. "Most of the homes that they are seeing are simply not worth getting into a bidding war over, so they're more than willing to wait until the new year in the hopes that more homes will hit the market." However, could that trend be on course to change in 2020? One of the many predictions by Redfin for 2020 is that the housing market will be more competitive in the year ahead, and that low mortgage rates will cause bidding wars to rebound. Redfin states low mortgage rates will continue to strengthen homebuying demand, but the lack of new homes for sale and homeownership tenure increasing will lead to fewer homes being available in 2020 than in the past five years. Bidding wars will rebound in Q1 2010, Redfin states, forecasting one in four offers will face bidding wars in 2020, compared to just one in 10 in 2019. Annual price growth is predicted to increase by 6% in the first half of the year—stronger than the 2% growth recorded in the first half of 2019. "Supply and demand will become more balanced later in the year as more listings of new and existing homes hit the market, allowing price growth to moderate to 3%," the report said.

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