(NEXSTAR) — The pandemic may be cooling down, but the real estate market is hotter than ever. As more Americans compete to own a limited number of homes, bidding wars are becoming a common part of the home buying experience.
A bidding war happens when multiple would-be buyers are interested in a property, so the parties put in increasingly higher offers in an attempt to secure the purchase.
It’s a trend prospective homeowners are familiar with in tight markets like San Francisco or Austin, but as the pandemic let many wealthier workers move anywhere, bidding wars are becoming more common in places that used to have reasonable or even sleepy real estate markets.
The eastern Washington city of Spokane saw the highest rate of bidding wars, according to Redfin’s analysis. In January, 83% of home sales involved multiple competing offers – up from 61% the year before.
“All over the country people rushed into the housing market in January to get ahead of rising mortgage rates,” explained Daryl Fairweather, chief economist at Redfin. “And there were very few listings available for everybody rushing to the market because most sellers wait until late spring to list. So there was a lot of demand coming before very much supply.”
That, folks, is a recipe for a bidding war.
The metro areas with the highest rates of bidding wars in real estate transactions, according to Redfin’s analysis:
- Spokane, Wash. (83.3%)
- Sacramento, Calif. (80.4%)
- Seattle (79.7%)
- Dallas (78.1%)
- San Francisco/San Jose (76.5%)
- Denver (75.8%)
- Austin, Texas (75.6%)
- Virginia Beach, Va. (75%)
- Raleigh, N.C. (75%)
- Boston (74.8%)
- Salt Lake City (74.7%)
- Portland, Ore. (74.4%)
- Colorado Springs, Colo. (73.7%)
- San Diego (73.7%)
- Philadelphia (72.9%)
As competition heats up in the cities listed above, prospective buyers may turn elsewhere, therefore driving up competition and bringing bidding wars to new areas. San Antonio, Texas, for example, is becoming a popular real estate destination for those fleeing the price hikes in Austin, said Fairweather.
She expected the same trend might come to more affordable Florida cities like Tampa and Cape Coral.
The percentages listed above indicate the share of offers that were part of a bidding war in January 2022. To make it on the list, Redfin said the metro area had to have recorded at least 20 offers submitted by Redfin agents.
See the real estate site’s full analysis here.