May 06, 2019
The Bidding Wars Cool Down
The top of 2019 has seen a continuation of the cooling-down of the housing market that began putting pressure on the breaks in late 2018. According to a February report by Redfin, bidding wars—which were a hot topic in December of 2017—had decreased markedly by December of 2018, and this trend stayed steady into the new year.
Bidding wars are a sure sign of a tight market: a sellers’ market in which demand for housing far outstrips the available inventory. The drop in number of such events indicates that either demand is falling, or inventory is rising—or both. Not only is the number of homes for sale increasing—up five percent in December 2018 from a year earlier—but the number of homes sold is down 11 percent in the same period. And there is some indication that new construction is on the rise after a surprising decrease in such activity starting in summer of 2018.
What are the differences in numbers of bidding wars on the local level? The most startling difference between December 2017 and January 2019 can be noticed in the very markets that were formerly the nation’s hottest: Seattle and San Francisco. Whereas late 2017 saw a significant number of bidding wars in these locales—as much as seven or eight out of every ten listings—in January 2019 fewer than one in ten listings saw such behavior.
Our own formerly fairly-hot service area of Boston, which in December saw around 53 percent of listings go through bidding competition, has cooled to the point that only 14 percent were competed over in January 2019 (which was also a drop of four percent from December 2018).
But this is not reason to be overly concerned. We are not witnessing the bursting of a bubble here—just a sort of correction to what was surely an overheated market. After all, house prices had been rising at a rate far outpacing the rise in wages since as far back as 2012. For that to go on much longer would have been more worrisome from the perspective of a bubble burst. This is more of a slight deflation. Which makes it a prime time to buy.
Our team here at Topouzis & Associates, P.C. does everything we can to be absolutely sure our clients are conveying and purchasing title clear of judgments and defects—whether the home is purchased in a sellers’ market or in a market favoring buyers. And, yes, we help our clients put into place a good policy of title insurance to make certain they don’t get surprised by any nasty lurking issues with a property. Contact us if you’d like us to do this for you.