Competition Between Home Buyers Hits Record Level in January 2022

Redfin, the Seattle-based, technology-powered nationwide real estate firm, is reporting that 70% of home offers written up by their agents in January (seasonally adjusted) were involved in a bidding war. That figure is up from 67.7% in December and from 61% in January 2021. In fact, it is the highest share since at least April 2020.

The report goes onto say that the housing market was more competitive than ever in January as mortgage interest rates jumped, prompting buyers to rush to make offers on homes before rates increased further. The average 30-year fixed mortgage rate was 3.55% at the end of January, up from 3.11% at the end of December and a record low of 2.65% about a year earlier. January was the first time rates surpassed 3.5% since March 2020, when the coronavirus pandemic was just beginning. Rates have since jumped even higher, reaching 3.92% during the week ending February 17, 2022.

In January, nearly three-quarters (72.6%) of Redfin offers for townhouses encountered competition in January—a higher share than any other property type. Next came single-family homes with a bidding-war rate of 70.6%, followed by condos/co-ops (62.9%) and multi-family properties (62.7%).

In commenting on the state of the marketplace, Redfin’s Chief Economist Daryl Fairweather said, “Rising mortgage rates are intensifying an already-severe shortage of homes for sale because buyers are feeling more urgency to buy while homeowners are feeling less urgency to sell—an imbalance that’s fueling an increase in competition. Buyers are battling it out for the few homes on the market in an effort to lock in relatively low payments before rates move even higher, but homeowners who bought or refinanced in the last year are staying put because they don’t want to lose their rock-bottom mortgage rate.”