Housing prices have reached record levels in many American cities. Across the 20 largest cities followed by well-known research firm Case-Shiller, real estate prices in more than half have hit all-time highs in 2020. One byproduct of the rush to buy homes is that more purchases involve more than one simultaneous bidder, which means that bidding wars have become inevitable in a growing number of home sales.
Prices continue to rise primarily for three reasons. One is that mortgage rates remain at 50-year lows. The second is that people have decided, in many cases because of COVID-19, they want to relocate from very large cities to smaller ones. Finally, although many low-wage jobs have been lost during the pandemic, middle class and upper-class incomes have risen.
Real estate listing company Redfin looked at home sales in January. Over the course of the month, 56% of the offers made through its service faced competition. The spread across the cities they tracked ran from 26% of the home sales in Atlanta facing competition to over 90% in Salt Lake City. In other words, there were bidding wars for almost every house in Salt Lake City where an offer was made through Redfin.
Redfin Chief Economist Daryl Fairweather suggested this bidding war trend is not over. “With so few new listings hitting the market, I expect bidding wars to become more common and involve even more potential buyers as we head into the spring homebuying season,” he said.
One reason Salt Lake City may be so attractive is that compared to other larger cities in the western part of the nation, home prices are modest. According to the National Association of Realtors, the median price of a home in Salt Lake City in the final quarter of 2020 was $405,000. Several cities that people are leaving in that part of the county have home prices that are more than two times higher. The median home price in San Jose, home to some of the world’s largest tech companies, for the same period was $1.4 million. In nearby San Francisco, the number was $1.14 million. In Anaheim, the figure was $935,000. In San Diego, the number was $710,000, and in Los Angeles $688,000.
Would it be any wonder if many of the bidding wars in Salt Lake City were because of buyers from large cities on the west coast?
|Metro Area||Offers Facing Bidding Wars in January|
|Salt Lake City||90.20%|