In a strong seller’s market, like the one we have experienced over the past few years, bidding wars are common and expected. This makes sense! A seller’s market is defined as a market in which the inventory of homes for sale cannot satisfy the number of buyers who want to purchase a home.
According to the Cambridge English Dictionary, bidding wars occur when two or more parties repeatedly outbid each other as they compete to purchase something- in this case, a home.
In some areas of the country, first-time buyers have been met with fierce competition throughout their experience. Some have been out-bid multiple times before finally winning a bid on a home to call their own.
According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), there is currently a 3.7-month supply of homes for sale.
With the current number of houses listed for sale and the level of demand from buyers, this means it would take 3.7 months for all the homes listed to sell if no additional listings came to market. Any supply number under a 6-month supply is considered a seller’s market. According to NAR, the housing market hasn’t had a 6-month supply of homes for sale since August 2012.
Good News for Buyers
A recent report shows that the percentage of houses sold including a bidding war before settling on a final price decreased from 53% in January of 2018 to 13% this year.
One reason for the decline is an influx of homes being listed for sale. Even though the month’s supply number is not increasing, the number of homes for sale is. The chart below shows the year-over-year change in inventory over the last 12 months.
As you can see, the number of homes for sale has started to build over the last eight months. Prior to this reversal, inventory levels had fallen for 36 consecutive months when compared to the year before.
Danielle Hale, realtor.com’s Chief Economist, gave some insight into why bidding wars are less common on a local level this year,
"[Last year] you might have been the only listing in your neighborhood, and you could put your home up at a certain list price and you would likely see multiple offers at or above that list price. That tide is turning this year.
It's going to depend on what neighborhood you're in, but we expect it to be more common this year that you won't be the only listing."
Inventory in the luxury and premium markets (the top 25% of listings in an area by price), is increasing at a greater rate than the starter home market. As the choices buyers have continued to increase, the likelihood of a bidding war will decrease.
Have you had any thoughts of selling or buying a home in 2019? To make an informed, educated decision that will produce an optimal outcome you will need help of an expert. Let's make the first step and talk about your real estate goals. Call today (984) 833-9233
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"One day, after Mr. Michael Johnson, took my wife and myself around for literally four (4) hours, perhaps even more on that day, looking for a house. I was at the point where I myself was saying to him that I thought that he had done enough for that day. We got to a lot in Wake Forest, that both my wife and myself liked. And as we stood there looking around I began speaking to Mr. Johnson, about my financial situation which to be truthful I am not proudful about one bit. Considering my age, and the length of time my wife and I have worked and yet our financial condition sucks, forgive my english grammar. Mr. Johnson, stood there and listened to me rant and rave about this matter, without as much as saying one single word. His eyes full of tears but yet he did not cry. He knew that I was hurt and ashamed of my situation, but not once did he as much as give me an idea that he did not care. I will never as long as I live forget that moment in my life, never. Mr. Johnson, then said to me after I dried my eyes from the tears that I shed there in front of him, he said to me, Oscar, we will do all we can to find you a home, I promise you that. Well, on December 31st. my wife, Carlota Belmo, Mr. Nelson Estrela, of New Penn Financial, Mr. Hamrick, the Attorney, Mr. Michael Johnson and myself Oscar Belmo, were at the table for closing on the home of our dream. Thanks to the effort of so many hard working people and the Grace of God. Thank you, thank you, thank you from the bottom of our heart. We love each and every one of you. God, bless you. May God, bless and keep each and every one of you."