Real Estate News & Commentary

Top 5 Markets Where Buyers Are Facing Bidding Wars (& Where Competition Is Much Less Fierce)

Expertise: Real Estate Deal Analysis & Advice, Real Estate News & Commentary
30 Articles Written
downtown San Diego

Around 54% of aspiring homebuyers who submitted offers faced competition in November, according to a recent report from Redfin. That marks seven straight months where at least half of all offers submitted through Redfin agents were contested by other offers.

Want more articles like this?

Create an account today to get BiggerPocket's best blog articles delivered to your inbox

Sign up for free

The good news is it’s a decline from October, which pegged the competition rate at 58.5%. But the flurry of competitiveness has been felt in the real estate market all year long.

The 5 Most Competitive Housing Markets

At the top of the list, San Diego had the most intense competition among buyers. Over 75% of all offers placed by Redfin agents were competed with by other buyers.

Related: How 2020 Changed Real Estate (and What 2021 Might Look Like)

To round out the top five list was Denver (66.7%); San Francisco/San Jose, California metros (65.8%); Seattle (60.9%); and Sacramento, California (60%).

Denver-based Redfin agent Justin Hess recently received 22 offers for a 3-bed house he listed in Thornton, a suburb 10 minutes outside Denver. The winning bidder ended up paying $35,000 over the $410,000 asking price and waived their appraisal contingency.

"Single-family homes that are priced right, in good condition, and in a desirable neighborhood are still selling quickly for top dollar," Hess said. "If you're a buyer, you had better bring your best punch and expect competition. People are paying a premium for the latest and greatest, updated, remodeled, turnkey homes."

Related: Home Lending to Shatter Records in 2020—With 9 Million Refinances and $4.4 Trillion in Mortgages

Daryl Fairweather, Redfin’s chief economist, went on to explain that steep competition has amounted to an increase in the number of new listings coming on to the market.

“Buyers aren’t going to compete for homes that have been sitting on the market,” Fairweather said. “They will typically only get into a bidding war for a newly-listed, desirable home that is move-in ready.”

It’s a counterintuitive sentiment, as many in the industry have pegged low inventory as the primary reason for the wave of competitiveness and price appreciation. The fact is, interest in buying shows little sign of easing up, and as such, competition will remain for the foreseeable future.

The 5 Least Competitive Housing Markets

Some markets experienced significantly less competition than others in November, with the bottom five well below average. Minneapolis came in last, reporting that just 34.6% of offers were competed with. The next four were Chicago (36.4%); Tampa, Florida (37.1%); Houston (37.3%); and New York (37.6%).

Related: America’s New Remote Workers Are Moving—Here’s Where

Beyond specific markets, condominiums as a whole felt the least competition. Redfin reports that 38.3% of condo offers were contested, compared to 48.7% with townhouses and 57.3% for single-family homes.

Did you encounter bidding wars in 2020? Where? What do you anticipate for 2021?

Join the conversation below.

BiggerPockets is the nation’s largest and most active real estate investing social network, designed to simplify and enhance networking, deal-making, data evaluation, education, marketing, and transactions for investors, consumers, and professionals.
    Kenneth Donaghy Realtor from San Diego, CA
    Replied about 2 months ago
    Only 75%? Interesting.
    Stephen Torti Investor from Providence, RI
    Replied about 2 months ago
    i'm sure the data doesn't show off market
    Robert Hartz Investor from Washington DC/Chicago, IL
    Replied about 2 months ago
    I’m Not surprised, I’ve seen SFH sell for 30-80K over asking price, here in DC.
    Logan Mongelli
    Replied about 2 months ago
    Interesting data on all Cash offers from CNBC: https://www.cnbc.com/2020/12/11/buying-a-house-heres-where-all-cash-deals-are-most-competitive.html
    Amy Pfaffman
    Replied about 2 months ago
    Thanks for sharing, Logan! I'm an Atlanta investor, so it was interesting to see it on the list for most cash sales.
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied about 2 months ago
    California's got 4 of the top 6. They desperately need to ease up on their building restrictions.
    Dominique Vescuso Real Estate Broker from Lake Elsinore, CA
    Replied about 1 month ago
    The new builders can not keep up either here in California. Most new builds are out 6-9 months until the home will be ready.
    Paul Marthaler
    Replied about 2 months ago
    They say California fees/legal adds $100,000 to the cost to build a SFR
    Joseph Leibovitch Rental Property Investor from Baltimore
    Replied about 2 months ago
    What are your thought about Baltimore MD?
    Billy Chaung
    Replied about 2 months ago
    The data seems very interesting especially when California cities make up 4 out of the top 6 while at the same time mass amount of people leaving California. Thought?
    Dan Heuschele Investor from Poway, CA
    Replied about 2 months ago
    CA already has a shortage of housing, especially coastal Ca, and the population continues to grow. In net population increase CA has been only behind Texas in net population increase. Add more people to areas that already do not have enough housing, has good employment, has low interest money available and it results in multiple offers and increased prices (19.4% average increase December to December per HomeDex).
    Andrew Baker New to Real Estate from Gilbert, AZ
    Replied about 2 months ago
    I think there's some confusion about how CA's population is changing. There's "population growth" and "net migration". The population growth is historically low but still positive and the net migration is a huge negative. State officials say California's population growth has slowed to the lowest rate on record. For the second year in a row, more people left the state than moved there. The result was a net migration loss of 135,600 people.Dec 16, 2020 https://www.abc10.com/article/news/local/california/californias-growth-rate-at-record-low-as-more-people-leave/103-3f814e19-ffe1-44af-90c0-a49168be4a60 As a 4th gen CA native, I moved this past August from the East Bay Area to the Phoenix area...couldn't stand CA's BS any longer. It's the middle class who are leaving in a mass Exodus.
    Amy Pfaffman
    Replied about 2 months ago
    I left the Bay Area too! I left in 2017, and my standard of living has drastically improved. Now that the tech workers can work from home, I think it's pretty compelling to move away where you can have a big house and a yard to raise your kids.
    Alvin Sylvain from Los Angeles
    Replied about 2 months ago
    California is quickly dividing along class lines. Poor people come here because if you have to starve, at least you won't freeze. Wealthy people come here because they can afford it. The folks in the middle are getting sick of the whole mess, and find they can sell their house, pay off the mortgage, then buy a much nicer house somewhere else for all or mostly cash. This is of course and over-simplification. There is a lot of gray area between what is "wealthy" and merely "well off", and between "starving" and "just surviving". But you can bet the folks in lower-middle are not competing to buy any over-priced California SFH.
    Dave G. Investor from Phoenix, Arizona
    Replied about 2 months ago
    Totally agree
    Benjamin Lenz from Walnut Creek, CA
    Replied about 2 months ago
    Yeah some people are leaving California, but people are also still moving or immigrating here as well. It’s simple supply and demand. There’s a ton of people here and the housing supply is limited. There’s not enough of an outward migration to put a dent in housing availability.
    Chris Zimdars from Pacifica, California
    Replied about 2 months ago
    Like Yogi Berra said, 'Nobody goes there anymore, it's too crowded.'
    Bob H. Rental Property Investor from Cedar Park, TX
    Replied about 2 months ago
    Politicians have not yet ruined the weather. :)
    Dave G. Investor from Phoenix, Arizona
    Replied about 2 months ago
    If you don’t count all the air-choking forest fires caused by forest mismanagement.
    Nikunj Merchant
    Replied about 2 months ago
    Not a big fan of this article. The data presented is almost useless without further context because there are different levels of competition at different price ranges. As an investor in Houston, for example, 100% of my offers in the last 4 months have been competitive because investment properties are typically lower priced. More expensive homes will generally have lesser competition. There is no real "insight" to be gained from a general comparison of market competitiveness averaged across every price range.
    Dave G. Investor from Phoenix, Arizona
    Replied about 2 months ago
    Agree, information is only useful if it can be used for decision-making or if it is entertaining. Article is weak on both counts.
    John Murray from Portland, Oregon
    Replied about 2 months ago
    Portland Oregon, growing and growing. The California migration is due north to about 45 Degrees North. The PDX City has resisted growth and now the housing shortage. The City charges $600 a linear foot just to break ground, then the permits and the cost of building. Time to sell and take profits. I have 6 SFH suburban homes left to sell and I'm done.
    Rachael Bertholino
    Replied about 2 months ago
    The most I've heard of was 200k over asking. Just had buyers that offered nearly 100k over a 1.298 purchase price and were beat out. I guess this chart doesn't surprise me! (San Diego, CA).
    Will Barnard Developer from Santa Clarita, CA
    Replied about 2 months ago
    I got that beat. I have one in escrow right now in Sherman Oaks, CA that the contract price is $255,000 over ask price. $1.95M ask, contract $2,250,000. It is 50% cash down and no appraisal too!
    Barry H. Investor from Scottsdale, AZ
    Replied about 2 months ago
    With more trillions about to be injected into the economy, prices and competition not likely to subside soon.
    Wale Lawal Realtor | Buy & Hold Investor from Houston, TX
    Replied about 2 months ago
    Great information. Houston, Texas is still very competitive for buyers. I have seen buyers paying up 15% over asking price and waiving appraisal and inspection contingencies. Most wholesale deals are also not meeting the 70% or even 85% rules.
    Christopher Hill Investor from Palmdale, CA
    Replied about 2 months ago
    Nice read. CA worries me and I live in Los Angeles County and see this daily. The MLS in my area is desolate. Bay Area is concerning though. People and companies are already leaving the Bay and rents and mortgages are still very high. I don't see prices dropping and people coming back. So what happens, is downtown SF just gonna be empty buildings? Really hope my job mandates we work from home again this year (sped teacher) but 2 years of no classrooms is a stretch. I'd definitely house hack in the midwest somewhere if possible.
    Luis Cruz New to Real Estate from Los Angeles, CA
    Replied about 2 months ago
    Agreed with your comments around Los Angeles, which is reflected in rental prices. Currently living here myself and work in the tech industry, there's been a mass exodus outside of the city to surrounding areas, as well as out of state to Austin & Nashville.