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Rising Rates and Increased Inventory Ease Homebuying Competition

NationalMortgageProfessional.com
Jul 11, 2013

Redfin released its June 2013 Bidding War Report, based on Offer Insights, statistics compiled from more than 2,000 offers written each month by Redfin agents for their home-buying clients. The report shows that the real estate market is continuing to become less competitive for homebuyers. In June, the percentage of Redfin offers facing competition fell to 68.6 percent, down from 69.5 percent in May, and down from its peak of 75.7 percent in March. The slight cooling of the market in June was driven by surging interest rates and increased inventory. The average weekly 30-year fixed mortgage rate rose from 3.81 percent in late May to 4.46 percent as of late June, according to Freddie Mac. During that period, the number of Redfin's home-buying customers taking home tours fell 1.9 percent and offers dropped 5 percent. Inventory has been climbing since April and saw a 17 percent year-over-year jump in May. "I have noticed a marked change in competition just over the last few weeks," said John Venti, a Redfin agent in Los Angeles, where still 86.1 percent of Redfin's offers faced bidding wars last month. "Each of the last three offers I wrote was accepted without a counter-offer, which has been unheard-of in LA, where a home in a popular neighborhood has typically attracted 30 or 40 offers over the last several months." The housing market's easing has not been felt evenly across the country, however. The Baltimore and Washington DC metro areas saw the largest month-over-month drops in the percentage of offers Redfin agents wrote that faced bidding wars, falling by 11.2 and 6.8 points respectively. Meanwhile, San Diego, Orange County, CA and Boston became more competitive from May to June, with bidding war rates increasing by more than 4 percentage points.
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