Even as the housing market cools nationally, buyers looking for homes in the Philadelphia region are more likely to face competition than almost anywhere else in the U.S., a new report finds.
According to an analysis by real estate firm Redfin Corp. (NASDAQ: RDFN), 66% of the offers on homes listed in Greater Philadelphia by Redfin real estate agents encountered competition in June. That’s a year-over-year dip of just one percentage point — a stark contrast to the rest of the nation, which is seeing a steep drop-off in bidding wars.
The report found that the rate of offers encountering competition nationally dropped below 50% for the first time since the start of the Covid-19 pandemic, coming in at 49.9% in June. That’s a far cry from the bidding-war rate of nearly 70% in January, the peak of competitiveness in the U.S. since Redfin began tracking it in April 2020. Redfin deemed an offer part of a bidding war if it received at least one competing bid.
Rising mortgage rates coupled with high home prices have begun to ward off potential buyers. It’s made them less inclined to compete for homes in a housing market that is already seeing affordability hit record lows. This is the fifth straight month that the percentage of bidding wars has declined nationally, and it was down 15 percentage points from 65% last June.
Tampa; Riverside, California; and Phoenix saw the smallest rates of competition in June as some of the markets that have been the hottest since the start of the pandemic begin to slow.
But even as the chaotic bidding wars that characterized much of the past two and a half years begin to wane nationally, the Philadelphia market is an outlier. There were only two metros — both in New England — that had a higher rate of competition than Philadelphia in June. Boston saw nearly 72% of home offers face competition, while bidding wars were encountered by almost 78% of offers in Providence, Rhode Island.
Home prices in the Philadelphia area continue to rise, as well, with the median increasing 9.2% year over year in June to $355,000, according to Bright MLS data. Though many expect the consistent rise to temper as demand slows, the high rate of competition in the Philadelphia area indicates that slowdown isn’t here yet.
Because of the consistent competition, the Philadelphia area is also seeing a relatively small percentage of homebuyers backing out of sales while home sale cancellations rise across the U.S.
Redfin found that about 15% of buyers across the country backed out of their purchases in June, the highest number since the market came to a near standstill in March and April 2020. In Philadelphia, that number was about 11%. In Montgomery County, which Redfin deems a separate metro area, only 6% of home sales fell through, the sixth-lowest in the nation.
Source: Philadelphia Business Journal