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. This has been true in Kitsap County as well.
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 nationally. Here in Kitsap County, as of the end of February, there is a little over a 1-month’s supply, an indication of an unusually strong seller’s market in our area.
With the current number of houses listed for sale and the level of demand from buyers, this means it would take just over one month for all the homes here in Kitsap listed to sell if no additional listings came to market. Traditionally, any supply number under 4 months is considered a seller’s market. A market equally balanced between buyers and sellers is one where there is a 4 to 6-month supply of homes for sale. Anything over a 6-month supply is considered a buyer’s market. According to NAR, the national 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 national 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. We have seen a similar reduction in multiple-offer situations here in Kitsap. Buyers have been less willing to engage in a competitive offer situation where they may be waiving contingencies or paying more than they feel is reasonable for the home in question.
Another reason for the decline nationally 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. Kitsap County is lagging behind the nation in this area, with inventory still at very low levels. However, we are beginning to see an uptick in the number of new listings coming on the market as we head into Spring.
As you can see, the number of homes for sale nationwide 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.
If you are a buyer, don’t despair! More choices may be coming your way. If you are debating listing your house for sale this year, you may not want to wait for additional competition as inventory continues to rise. If you have questions, please feel free to ask. As always, I am here and happy to help!