Homebuyer Competition Rose to a Record High in February
After two years of heightened housing prices and elevated competition, bidding wars are easing at the start of 2022, but home offers are still facing a record high bidding war rate, Redfin reports. As mortgage rates continue to rise, homebuyer competition is tightening across the country, but elevated prices are pushing a growing number of buyers out of the market altogether.
El Paso, Texas reported the highest bidding war rate across the 50 U.S. metropolitan areas surveyed by Redfin, with 87.5% of total offers facing competition in February. Roughly three-quarters of townhouse offers concluded in bidding wars in February, a higher share than any other property type, followed by single-family homes with a bidding war rate of 72.9%.
“It’s the most competitive time in history to purchase a home because mortgage rates are rising from historic lows amid a worsening supply shortage,” said Redfin Chief Economist Daryl Fairweather. “Bidding wars intensified this year after rates started spiking, which lit a fire under buyers. Competition will likely plateau or even decline if rates keep increasing as expected. Monthly mortgage payments for new buyers are already at a record high. As they continue to creep up, some buyers will move to the sidelines.”