Due to several mortgage interest rate hikes and low housing inventory across the board, 2018 made for a particularly difficult year for homebuyers. And while 2019 is predicted to remain a sellers market for much of the US, a recent drop in interest rates for 30-year and 15-year fixed mortgages, has lead to a 9% increase in purchase applications. We haven’t seen that big of a jump since 2010.
This means despite the competition, many people are still planning on buying a home this year, in order to take advantage of the interest rate savings, which can be anywhere from $50 to $200 a month. If you happen to be one of those people or maybe you’re just curious about market trends, here is a list of the most competitive cities to buy a home according to Redfin.
These results reflect the percent of offers written by Redfin agents between September and November of 2018.
- Oakland, CA
Specifically the neighborhoods of Oakmore, Glenview, and Lincoln heights saw 90% of offers face competition. This number is actually down from 2017 where it reached 100%. - Washington, DC
DC saw competition in 85% of homes in neighborhoods of Adams Morgan and Cardozo. The Placentia neighborhood of Orange County, CA also saw similar competitive offers. - San Francisco, CA
The Mission District of San Francisco saw 80% competition. And make sure to start saving now as the average 20% down payment is around $180,000 for this area, which could easily cover the cost of an entire home in Louisville, St. Louis, Memphis, Indianapolis, Cleveland, Oklahoma City, and Buffalo, NY. - Boston, MA
Arlington Heights and Malden neighborhoods were particularly competitive at 79%. Boston, as a whole, finds several neighborhoods among this list due to lack of homes on the market and the demand for housing near its prestigious universities. - San Jose, CA
The Milpitas neighborhood faced competition among 73% of offers. It’s also interesting to note, that San Jose ranks as the city requiring the highest down payment for its homes, where the median price is $1,180,000.
An interesting omission from this list is Seattle, whose competition rate was only around 25% during the time of this study. Seattle frequently ranks as one of the most competitive housing markets, but November saw a median home price of $644,000 in November versus $726,000 in early 2018 for King County. Sales were also down 19% in 2017 when compared to 2018.
If you’re considering buying a home in any of these markets, be prepared for competition and accept the possibility of paying more than asking. Also, keep an eye on interest rates as they can have a big impact on how many homebuyers enter marketplace.
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