TAMPA, Fla. (WFLA) — A new real estate report by Redfin about home buyer bidding wars showed that April was the second month in a row where competition scaled back compared to the year before. Across the U.S., Redfin said just over 60% of home offers faced competition in April, down from 63% in March.
However, in seven cities surveyed by Redfin, competition grew. Tampa was on that list, one of two Florida cities to see competition heat up while most of the country’s bidding wars slowed down.
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Despite the higher mortgage rates U.S. homebuyers are now facing, some of the cities that saw increased bidding wars from March to April 2022 also had higher levels of competition compared to the year before.
Tampa and Detroit both had higher competition levels than in April 2021. Tampa’s level was 68.3% in April 2021, while Detroit was 69%.
“Homes that would have received 10 offers several months ago are now getting two or three. That’s because the jump in mortgage rates has forced a huge pool of first-time buyers to drop out,” said Elizabeth Rodriguez, a seller’s agent with Redfin. “The buyers who are still in the market are those who are less sensitive to mortgage rates because they have big cash reserves.”
Redfin said as a result of the higher interest rates, and the drop in bidding wars, the housing market is slowing down. Pending home sales have dropped 6% compared to this time in 2021, which Redfin said was the biggest decrease since June 2020. Mortgage applications have also decreased, down 8%.
“The housing market has softened in recent weeks because mortgage rates have surged to their highest level in more than a decade as the government tries to quell inflation,” Redfin said. “The average 30-year fixed mortgage rate is now 5.3%, up from 3.76% at the start of March and a record low of 2.65% in January 2021. The rise in rates and home prices has sent the typical monthly mortgage payment for homebuyers up a record 44% year over year to an all-time high of $2,427.”
Higher mortgage rates and continuing competition amid the housing shortage has led to a drop in demand for homes, but Redfin said that Americans who are still looking to buy a house are “rushing to beat” the rising rates.
Prices are reportedly dropping, leading to “some relief from competition,” according to Redfin agent Rin Barrett. Some of the homebuyers who had been outbid “are starting to get their offers accepted.” He said some are settling for a home that needs work or might not be located exactly where they want, but they’re taking the opportunity “because a few months ago even those seemed impossible to win.”
Barrett said homes in “prime locations” are still selling quickly and at a premium.