SEATTLE-A recent report from locally based Redfin shows that in October, 55.9% of offers written by Redfin agents faced bidding wars, down from 58.3% in September. This is was the seventh month in a row that Redfin reported a month-over-month drop in competition. October also was the third consecutive month to see competition fall below 2012 rates.
Competition continued to soften in October amidst the US government shutdown and plummeting consumer confidence. Despite the uncertainty in the overall economy, overall homebuyer demand in October was actually more robust than expected. This unexpectedly strong demand paired with dwindling inventory likely kept competition from falling even further in October, says Redfin.
"In welcome news for buyers, bidding wars are nearing 2011 levels," according to Redfin economist Ellen Haberle. "This reprieve is unlikely to last much longer; as soon as the clock strikes midnight on New Year's Day, competition probably will reverse course as the 2014 selling season takes off."
The report's key findings include:
Multiple Offers
*Competition declined the most in Boston, with 61.3% offers facing bidding wars in October, down from 70.1% in September.
*San Diego became more competitive in October, with 63% of offers going up against multiple bids, compared to 56.1% in September.
Price Escalations
* Chicago buyers enjoyed the greatest negotiating power in October, when home sale prices represented, on average, a 4.9% discount from the seller's list price.
*San Francisco was the only market among Redfin's most competitive where purchase prices averaged higher than asking prices, with the typical home sale registering a 1.4% premium.
*San Francisco and San Jose were home to the largest percentages of sold homes with price escalations, with 62.3% and 54.9% of homes selling above listing price, respectively.
Competitive Strategies
*Across the 22 markets, the prevalence of personal cover letters as a competitive strategy increased to 23.7% of successful Redfin offers, from 20.1% in September.
* San Diego was home to the highest percentage of all-cash offers, with 6.7% of Redfin's winning bidders paying all cash there. Los Angeles, with 6.3% of successful offers being all cash, was not far behind.
* In San Francisco, the strategies of waiving financing and inspection contingencies became more popular, with 19% of winning offers waiving the financing contingency in October, compared to 17.9% in September, and 19% waiving the inspection contingency, up from 10.7% in September.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
