Thanks to low home supply and fierce buyer competition, bidding wars on homes have become commonplace in today’s housing market. Luckily, those trying to score a property in Phoenix have a lower chance of getting wrapped up in an offer feud compared to other U.S. metros
A new report from Redfin shows that Phoenix has one of the lowest bidding war rates nationwide. The technology-powered real estate brokerage ranked 36 U.S. metro areas by lowest to highest bidding-war rates in August 2022. Each metro recorded a monthly average of at least 50 offers submitted by Redfin agents between March 2021 and March 2022 to be included in the report.
Compared to the other metros on the list, Phoenix reported one of the lowest bidding war rates, ranking in 33rd place out of 36 cities. In August, 26.4% of Phoenix Redfin offers faced competition, down slightly from 26.9% in July and significantly lower than August 2021 when 57.9% of offers faced competition.
The Phoenix metro was slightly more competitive than Olympia and Tampa, where 24.2% and 23.8% of offers, respectively, experienced buyer competition. Redfin noted that Tampa, Olympia, and Phoenix are among the 20 U.S. housing markets that are cooling the fastest in 2022, a change of pace after attracting hordes of buyers over the course of the pandemic.
San Antionio had the lowest bidding war rate nationwide in August 2022 at 21.7%, an approximately 50% drop from the 43.4% bidding war rate recorded for the metro during the previous month.
At the top of the list, buyers in Philadelphia were the most likely to fall into a bidding war, with 61.7% of Redfin offers facing competition in August 2022. This percentage has remained mostly unchanged over time, with 63.1% of Philadelphia offers reporting a bidding feud in July 2022 and 60.2% in August 2021.
Bidding war rate falls to lowest level since April 2020
Although some metros are still reporting a high bidding war rate, the good news for buyers is that the frequency of offer competition is falling overall.
Redfin reported that 44.6% of purchase offers written by Redfin agents nationwide experienced competition in August. This percentage marks the lowest bidding-war rate since the beginning of the pandemic in April 2020. The national bidding war rate fell from 63.5% in August 2021 and is down from 47.2% in July 2022, signaling the seventh-straight monthly decline.
In August, a typical home in a bidding war received 3.2 offers, down from 3.5 offers one month earlier and five offers In August 2021.
“The bidding-war rate is falling as the housing market cools and buyers back off from the pandemic-driven homebuying frenzy in 2021 and early 2022, with the number of home sales down nearly 20% year over year,” explained the Redfin report. “Buyers are dropping out of the market and competition is dwindling largely because mortgage rates have doubled from a year ago, reaching 6% in mid-September.”
Comparing all home types, townhouses were more likely than other properties to encounter offer competition with a bidding war rate of 44.1%. This was followed by single-family homes (42.1%), multi-family properties (40.2%) and condos (37%).
“Townhouses are popular in today’s pricey housing market because they’re typically smaller and more affordable than single-family homes,” said the report.