Bidding Wars Are at a Two-Year Low; Should You Buy Now?
Blog posted On August 09, 2022
If you’ve been waiting for the market to cool, now might be your chance. The red-hot housing market is cooling off, just in time for Fall. Buyers have more options, more likelihood of price cuts, and less likelihood of bidding wars.
A year ago, buyers had a two-in-three chance of facing a bidding war. In June 2022, that number dropped below 50%. This is the first time that buyer competition dropped below 50% since May 2020. In certain areas, the number of bidding wars is even lower.
What is a bidding war?
Bidding wars are when a listing receives two or more offers. Typically, bidding wars drive up the price on a home. Buyers will increase their offer in order to out-bid their competition.
How fewer bidding wars helps you
- Greater likelihood of lower purchase price – When will home prices go down? Well, with fewer bidding wars on the market, you have a greater likelihood of purchasing a home at or below the listing price. While home prices are still high, it’s less likely that you will have to submit an offer that’s tens or hundreds of thousands of dollars over the listing price. “The days of bidding wars and homes selling for tens of thousands of dollars over asking are over,” said Daryl Fairweather, chief economist at Redfin.
- Less competition, more options – Fewer bidding wars is a result of fewer buyers in the market. The sky-high demand for homes is finally starting to descend back to reality. This has given the record-low inventory of homes a chance to recover. Finally, home supply is returning to a healthier level – giving buyers more options to choose from.
- More price cuts – Bidding wars sent prices soaring last year. Fewer offers and fewer bidding wars are driving sellers to reduce their home prices. In June, one in seven homes had a price cut, according to Realtor.com – almost double the amount from 2021.
Additionally, mortgage rates have been trending lower for the past two months. If you’ve been wondering when will home prices drop, take advantage now! We would be happy to talk more, help you get preapproved, and discuss your different options.
Sources: Money, Mortgage News Daily, Wall Street Journal