The housing market’s inventory crisis is showing no signs of abating, meaning if you’re in the market for a new home, there’s a growing chance you’ll find yourself in a bidding war.
Data from Redfin shows 70% of the offers written by the company’s agents in January faced competition, the highest level since the company began tracking that metric in April 2020.
In tracking bidding wars, though, Redfin has also been tracking who wins them most often. And the clear path when it comes to standing out from the pack is an all-cash offer.
Buyers who offered all cash were 400% more likely to be chosen by sellers, according to a new Redfin report.
Other effective strategies, though much less so, included waiving the financing contingency (giving buyers a 31% increased chance at closing the sale) and conducting a pre-inspection (25% improvement).
Two other methods, which have been touted as effective ways to win bidding wars, though, showed no significant improvement for buyers. Both waving the inspection contingency and escalation causes have become so common in a competitive marketplace that they don’t sway sellers.
Competition among home buyers is not slowing down in 2022. Last year, more than 30% of U.S. homes sold for above their asking price. In February, that share increased to 43%, Redfin says.
The number of bidding wars for homes could go down this year, of course, if the number of available properties increases. But so far, at least, that’s not happening.
On Friday, Zillow reported that U.S. inventory sank to 729,000 home listings in February. That’s down 25% from February 2021, and the fifth consecutive month of declining inventories—far below pre-pandemic levels.
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