Key Takeaways • Builders often win bidding wars because they can pay cash and close quickly. • You can still compete by learning how to make a strong offer on a house, securing solid financing, and staying flexible with terms. • Partnering with an experienced local agent gives you a major advantage in teardown markets.
You’ve been house hunting for weeks, maybe months, and you’ve finally found a home that feels just right. You put in what seems like a strong, fair offer and wait for the seller’s reply, only to learn you’re not the only one interested. Even in today’s cooler housing market, certain properties still attract multiple offers and spark fierce competition.
If you’ve been searching in a hot teardown market, you’ve probably felt that frustration firsthand, finding the perfect home, making an offer, and losing to a builder or investor with deep pockets. Builders often target older homes to demolish and rebuild, which gives them the advantage of speed and all-cash flexibility. That is why knowing how to make a strong offer on a house is essential, especially when competing against cash buyers.
According to Redfin data, about 29% of home purchases in competitive markets involve all-cash buyers, many of them investors or developers. It can be tough for traditional buyers using financing, but with the right strategy, you can still come out on top in a bidding war on a house.
What is a bidding war?
A bidding war is a real estate term for when a seller receives multiple offers on their home in a short amount of time. Unfortunately, it also means the seller can wait to see whether buyers are willing to raise their offers—and by how much—along with other concessions to make their offers more attractive.
It’s a tight spot for a homebuyer. However, with representation from an experienced real estate agent, you can navigate the bidding war process wisely and win the house.
1. Strengthen your offer beyond price
You might not be able to match a builder’s cash offer dollar for dollar, but you can make your offer stand out in other ways.
Get fully underwritten before you shop. A pre-approval is good, but full underwriting shows sellers you’re serious and ready to close quickly. • Shorten contingencies when possible. If your lender is solid and you’re confident in your inspection, tightening timelines can make your offer more appealing. • Offer a higher earnest money deposit. It signals financial stability and commitment.
Tip: Work with your lender and agent to present your financing like cash, fast, secure, and reliable. If you’re wondering how to make a strong offer on a house, start by focusing on these financing details first.
2. Talk to the seller (if you can)
Even in today’s more balanced housing market, competition can still arise for the right home. When all else fails, it may help to connect personally with the home seller. While buyers and sellers usually communicate through their agents, a genuine message can sometimes make a difference. If appropriate, and if allowed in your state, consider writing a short, heartfelt letter to the seller explaining why you love the home and how you plan to care for it.
Builders and investors often focus only on the property’s land value, which means they lack the personal connection many sellers still appreciate. Some homeowners prefer to sell to someone who will actually live in the home they’ve maintained and cherished. By pairing an authentic note with a strong, well-prepared offer, you can stand out even if your bid isn’t the highest.
You can also strengthen your offer by adjusting terms that appeal directly to the seller, such as: • Allowing them to choose the closing date • Offering a rent-back period after closing • Covering minor repairs or agreeing to purchase the home “as is”
Engaging in a bidding war on a house can be stressful, but being flexible and personal can often tip the scales in your favor. The key is to prepare early, stay calm, and keep your emotions in check. With the right combination of strategy and sincerity, you can still win the home that feels meant for you.
3. Use an escalation clause in your offer
Another tip in the offer arsenal is to include anescalation clause to tell the seller how much you are willing to raise your offer if competing bids come in. The escalation clause would set a cut-off price that you won’t exceed. Real estate agents don’t typically recommend this, since it tips your hand for future negotiation, but it can help you cut to the chase in an extremely competitive market.
4. Target properties that builders overlook
Builders usually focus on large lots, corner properties, or homes in zoning areas that allow new construction. You can gain an edge by searching for homes that don’t fit their typical criteria.
Your agent can filter listings to find: • Homes with smaller or irregular lots • Houses already updated or move-in ready • Properties just outside the builder “hot zones”
Redfin real estate tools like Map Search and Hot Homes alerts can help you spot opportunities faster than competitors.
5. Work with a local expert who knows builder patterns
In teardown-heavy markets, knowledge is power. A Redfin Agent who’s experienced in local bidding dynamics can help you anticipate builder moves, time your offers, and use data to your advantage.
They might know: • Which builders are currently active in specific neighborhoods • What price per square foot builders are willing to pay for land • How to identify homes that are undervalued or under the radar
That insight can help you submit a winning offer before a builder even spots the listing.
6. Consider homes that need cosmetic updates
Builders usually want clear teardown opportunities, not minor fixer-uppers. Targeting homes that need only cosmetic work can open more doors. You’ll face less competition and often get better pricing.
Even small improvements, fresh paint, updated fixtures, refinished floors, can make these homes feel brand new without the high price tag of a total rebuild.
7. Increase the amount you’re willing to put down
If the bidding war heats up and you can’t increase your offer amount, perhaps you can increase your down payment or the amount you put down in earnest money. This shows the seller that you are very serious, and your lender will not need to approve you for a higher loan amount. This tactic can put you ahead of other homebuyers who may appear less serious about buying the home.
8. Be flexible on your closing date
Flexibility around specific details in a real estate deal is nearly as good as coming to the table with cash. If you don’t need to move by a specific date or can give the seller more time to fix repairs, being flexible on a closing date can be as attractive to the seller as a higher offer. It can especially work in your favor if the competing offers come in with hard deadlines.
9. Stay patient, but stay ready
Winning a bidding war on a house isn’t about luck; it’s about timing, preparation, and persistence. You may lose a few offers, but every experience makes you sharper.
Keep your financing updated, your paperwork ready, and your strategy flexible. When the right home appears, you’ll be able to move confidently and compete, even against builders.
Frequently asked questions
Why do builders usually win bidding wars? Builders can make fast, all-cash offers with no financing contingencies, making them more attractive to sellers looking for quick closings.
How can I compete with a cash offer? Get fully underwritten, shorten contingencies, and work with an experienced agent who can position your financed offer as nearly risk-free.
What kind of homes should I target to avoid builder competition? Look for move-in-ready homes or properties that need only light updates, builders prefer clear teardown opportunities or large lots.
What is the hardest month to sell a house? The hardest months to sell a house are generally December and January, due to cold weather, holidays, and a general slowdown in buyer activity. Other challenging months include late fall, particularly November, as people focus on the holidays and getting settled before winter, leading to fewer serious buyers.
The bottom line
Going up against builders can feel intimidating, but it’s definitely possible to win. Focus on making your offer as strong as possible, work with a great agent who knows the local market, and remember what matters most to sellers. If you’re heading into your next bidding war on a house, knowing how to make a strong offer on a house could be the key to finally landing your dream home.
In today’s housing market, landing multiple offers on a house is still possible — but it requires strategy. As of July 2025, 29% of homes sold above asking price according toRedfin U.S. Housing Data, proving that buyers still compete for desirable listings.
However, the market has shifted: by April 2025, the number of sellers exceeded buyers by about 34%, giving buyers more leverage. Still, in hot markets, sellers continue to see multiple offers and bidding wars.
If you’re looking to maximize interest, here are proven strategies to incite a bidding war and secure multiple offers in 2025.
How to get multiple offers on a house in 2025
1. Price strategically
Pricing is the single biggest driver of competition. Homes listed just below or at market value create urgency — buyers perceive they’re getting a fair deal and act quickly to avoid missing out. Overpricing, on the other hand, can backfire: a home that lingers on the market becomes “stale,” which often leads to price cuts and lower offers in the long run.
Pro tip: Work with your agent to review comparable sales in your neighborhood. If similar homes are selling at $500,000, you may want to list at $495,000 to invite interest. That small difference could bring in multiple buyers and push offers above asking.
2. Stage for maximum appeal
Buyers often decide how they feel about a property within the first few minutes of seeing it. Professional staging highlights your home’s best features — like brightening up rooms, decluttering, and rearranging furniture for flow. A well-staged home photographs better, attracts more online attention, and can emotionally connect with buyers.
Pro tip: Even small investments, like fresh paint in neutral tones or adding fresh flowers, can help buyers picture themselves living there. According to the National Association of Realtors, staging can increase a home’s value by 1% to 5% compared to similar unstaged homes.
3. Market broadly and visually
In 2025, online visibility is everything. High-resolution photography, drone footage, and 3D virtual tours help buyers fall in love before they even step inside. Widespread exposure — through the MLS, Redfin, and social media — ensures your home reaches the maximum number of buyers. More eyeballs mean a greater chance of attracting multiple offers.
Pro tip: Ask your agent about running a “coming soon” campaign or paid digital ads to generate buzz even before your home officially hits the market.
4. Work with an agent who manages deadlines
A strong listing agent does more than market your home — they create urgency. By setting a specific window for showings and a clear deadline for submitting offers, your agent encourages buyers to act fast and put their best offer forward.
Pro tip: For example, listing on a Thursday, hosting an open house over the weekend, and setting an offer deadline for Monday can generate momentum and help drive up competition.
5. Offer flexibility to buyers
Sometimes the winning detail isn’t the price — it’s the terms. Buyers juggling interest rates, moving schedules, or home-sale contingencies may favor a seller who’s flexible. According toMarketWatch, sellers who allow wiggle room on closing dates or minimize contingencies often gain an edge.
Pro tip: Consider offering rent-back agreements or being open to buyers’ preferred closing timeline. Flexibility can attract more offers, even if some buyers can’t match the highest bid.
6. Understand local demand
Not all markets behave the same in 2025. Some areas, especially urban centers with limited housing supply, are still seeing heated bidding wars. Others, where new construction has surged, are more balanced. Tailoring your strategy to local dynamics ensures you don’t leave money on the table.
Pro tip: Use Redfin’slocal housing market data to understand how competitive your area is. If homes in your ZIP code are selling in days with multiple offers, consider pricing slightly under market to incite a bidding war. If inventory is higher, focus on staging and marketing to stand out.
How can I attract multiple offers on my home? Price competitively, stage professionally, market widely, and partner with an experienced agent who knows how to manage offer deadlines.
Final thoughts
Winning multiple offers on a house in 2025 requires more strategy than in past years. With inventory up and buyers gaining leverage, success comes from smart pricing, strong staging, strategic marketing, and agent expertise. In the right market, these tactics can still ignite a bidding war, helping you maximize your sale price and close with confidence.
Whether you’re buying or selling, these Redfin guides can help you navigate today’s market:
18 housing trends that defined the year, including record mortgage rates, depleted inventory, and dwindling home sales
2023 was a difficult year for the housing market. It started with a continuation of negative trends from the end of 2022 and turned into the least affordable year for home buying on record.
The market was so difficult that more than half of recent homebuyers believed buying a home was more stressful than dating, and nearly 40% of homebuyers under 30 received money from their family to afford a down payment.
So what happened? In short: Record mortgage rates, high inflation, and persistently high housing and rental prices. But there was a lot more to it as well.
Below are trends, data points, and visuals that defined the 2023 housing market.
All data is aggregated from January through November 2023, and does not include December unless otherwise stated. December data is through the 15th of the month. All data is from Redfin, FRED, NAR, and/or public records. For questions about metrics, read our metrics definitions page.
1. Home prices rose to near-record highs
The U.S. median sale price peaked at $425,000 in June, just below last year’s record high of $433,000. However, when averaging over the entire year, 2023’s average median sale price was higher than any previous year in history, rising from $407,000 in 2022 to $409,000.
“The unusual combination of low supply and low demand caused home prices to remain elevated throughout the year, which was bad news for pretty much everyone,” laments Daryl Fairweather, Redfin Senior Chief Economist. “The market was extraordinary; it felt hot, even though very few homes changed hands.”
2. San Francisco was the most expensive metro area for homebuyers in 2023
The top six most expensive metros were all in California.
Milwaukee saw the largest year-over-year price increase in the country, rising 8.8%.
Three Florida metros were among the ten metros with the largest year-over-year increases: Miami (8.4%), West Palm Beach (7.6%), and Fort Lauderdale (7.2%).
The top ten most expensive metros to buy a home in 2023
Data includes the yearly median sale prices out of all homes sold in each of the 50 largest metropolitan areas. Data does not take into account local median incomes and home affordability.
3. Detroit was the least expensive metro area for homebuyers in 2023
The median sale price for a home in Detroit was $173,450 in 2023, down 2.7% year over year. Even though prices fell in 2023, homes in Detroit are more expensive than they were before the pandemic, as an influx of people searching for affordability have pushed up prices.
“Home prices remained fairly stable in Detroit and even rose in some areas,” says Anne Loehr, a Detroit Redfin agent. “However, across the city, recently updated homes went for the most money.”
Eight of the most affordable U.S. metros saw prices rise as homebuyers pounced on less expensive housing.
Nine of the ten least expensive metros were all located in the Rust Belt, a geographic region near the Great Lakes and Appalachians.
Three pandemic homebuying boomtowns saw the largest year-over-year price drops: Austin (-9.7%), Oakland (-4.8%), and Phoenix (-3.9%).
The top ten least expensive metros to buy a home in 2023
Data includes the yearly median sale prices out of all homes sold in each of the 50 largest metropolitan areas. Data does not take into account local median incomes and home affordability.
4. Rent prices remained historically high but stopped short of new record
The median U.S. rent price hit $2,050 in August 2023, matching the record price of $2,050 set in August 2022. Year-over-year price changes were flat until November when they dropped significantly, as an increase in inventory and vacancies forced landlords to hold rents steady or drop them. Other contributors to the quieter rental market: Strong new construction in the apartment industry, and fewer new households forming (two or more people living together).
“November provided the most relief for renters,” says Maggie McCombs, managing editor of Rent., a Redfin company. “Prices dropped by 2.1%, marking the first time in more than three and half years that prices fell by more than a single percent. We expect decreases to continue into 2024.”
This was in stark contrast to the past two years, which went from sudden growth during the pandemic to a free-fall in the second half of 2022.
“One of the biggest changes compared to 2022 was the slowdown in the rental market,” adds Fairweather. “Last year, rent prices skyrocketed in the first half of the year due to low supply and high demand. However, in 2023, supply began to catch up, causing many landlords to keep prices flat amid higher vacancy rates.”
Even though growth slowed, the average rent price for all months through November in 2023 rose $10 to $1,992, the highest in history. This only worsened the affordability crisis across the country, especially for lower income families. Rent growth has outpaced wages for decades, but the most recent data states that the average renter now spends 30% of their income or more on rent.
The U.S. currently has a shortage of 7.3 million affordable housing units for those who need them, and no state has an adequate supply.
Data includes the 2023 average aggregated median rent prices for each of the 50 largest core-based statistical areas (CBSAs) compared to 2022 data from the same period.
5. Inflation remained stubbornly high before finally falling
The prices of goods and services rose 6.6% year over year in February, just below 2022’s high and the second-highest inflation level since August 1982. Inflation then fell steadily throughout the year, albeit still above healthy levels.
As interest rates hovered around 0.5% for the entirety of the pandemic, inflation took off due to supply crunches and increased consumer demand. The Fed raised its benchmark rate in 2022 to combat inflation and cool the economy – that began working this year, but higher interest rates led to higher mortgage rates, which slowed the housing market. Interest remains high as we end 2023, but economists expect them to start coming down next year.
Since the Fed began raising the target rates in March 2022, they have increased it 11 times to the current range of 5.25-5.5%.
Inflation remained highest in pandemic boomtowns due partly to the sudden jump in house prices, which is a key contributor to inflation.
Data courtesy of FRED. Data measures CPI (less food and energy) through November 2023.
6. Mortgage rates ballooned beyond 8% for the first time in over 20 years
“Mortgage rates were the name of the game this year as record inflation helped push daily average 30-year fixed rates past 8% for the first time since 2000, pricing many buyers and sellers out of the market,” says Fairweather. “Home buyers didn’t want to pay twice as much for a home than they would have three to four years ago, and home sellers didn’t want to give up their pre-pandemic rates.”
Higher mortgage rates impacted affordability across the market, straining already sapped budgets. In July, the average monthly mortgage payment reached $2,637 and grew more than twice as fast as wages (12.6% compared to 5.2%). Both were record highs. Affordability (or lack thereof) also directly affects housing inequality, which is wider now than it was in the 1960s.
Importantly, mortgage rates fell noticeably before the end of the year due to inflation easing up, the Fed holding rates steady, and the labor market growing slower than expected. While interest rates aren’t predicted to fall until midway through next year (three rate drops are predicted in 2024), mortgage rates could continue to fall sooner.
“Looking ahead, whether interest rates will fall depends on two things: the strength and resiliency of the economy, and consumer behavior,” notes Matt Birdseye, Executive Vice President at Bay Equity, a Redfin company. “Until unemployment rises and the economy slows, rates are unlikely to fall.”
Just 16% of homes were affordable for the typical household in 2023, likely the lowest for the foreseeable future.
Graph shows aggregated average mortgage rates, not daily rates, which is why the graph does not depict the 8% high. Daily rates are more variable.
7. Homebuyers looking to relocate favored sun and affordability
“Generally speaking, the proportion of buyers looking to relocate was higher in 2023 than in 2022,” notes Chen Zhao, Redfin Senior Economist. “Despite buyer demand falling overall, those who looked to buy sought more affordable locations to get more for their money.”
Surprisingly, the risk of natural disasters didn’t push home prices down in many at-risk metros. “We expect this to change in the near future, though,” continues Zhao.
Many of the top migration hotspots were sunny, more affordable metros which grapple with severe climate risks such as heat, drought, and flooding. This is not new; in fact, from 2021-2022, migration into the most flood-prone areas doubled compared to the prior two years. This comes as 2023 set a new record for billion-dollar weather disasters.
“It’s human nature to focus on current benefits over costs that could rack up in the long run,” admits Daryl Fairweather. “In short, the consequences of climate change haven’t fully sunk in. This is partly because most homeowners don’t foot the bill when disaster strikes. But as insurers continue to pull out of disaster-prone areas, people may feel a greater sense of urgency to mitigate climate dangers – especially if their home’s value is at risk of falling.”
The top five most popular metros people looked to move to in 2023
Data is the percent of Redfin.com users searching for homes outside their metro. Data is the annual median aggregate of multiple three-month rolling aggregates. Keep up with the latest migration news here.
8. Housing inventory remained well below average
There was an average of 1.015 million homes listed for sale every month in 2023, down 0.1% from last year. Monthly inventory peaked at 1.1 million homes, below 2022’s 1.26 million and far below historical normals.
Cincinnati (-41.9%), Newark (-24.3%), and New Brunswick (-21.9%) saw the biggest inventory declines, with Chicago coming in fourth.
Mortgage rates were the primary reason why inventory was so sluggish. Nearly a quarter of all homeowners had an interest rate below 3%, and around 90% of homeowners had rates below 6%, leading many would-be sellers to stay put to avoid taking on a higher rate.
Inventory is calculated in rolling 90-day periods, e.g., January 2023 data is the three-month period from November 1, 2022, through January 31, 2023. Redfin inventory records date back to 2012.
9. New listings dropped to their lowest level on record
There were just 5.4 million new listings in 2023, the lowest level on record and a massive 16.4% drop from 2022. Average monthly new listings also posted sharp declines, falling from 585,000 in 2022 to 520,000 this year.
New listings are one factor that make up total housing inventory. The dramatic drop in new listings was primarily due to skyrocketing mortgage rates, keeping buyers and sellers on the sidelines.
Year over year, new listings fell every month in 2023 until November, when they began to rise for just the second time since July 2022. That same month, they also posted their biggest increase since 2021 as mortgage rates fell to under 7.4%, well below the high of 8%. Listings continued to rise into December.
This year, new listings were also a major factor in determining local market trends. For example, new listings dropped a massive 24% across New York State in 2023, causing a ripple effect. “The drop in new listings created a surge in competition among buyers looking for affordable homes,” says Kimberly Hogue, a Rochester Redfin agent. “Sellers were able to benefit massively in many Upstate markets as buyers competed over the few homes left, leading to a spike in prices.”
Joey Keeler, a Redfin Premier agent in Seattle, agrees, but says that favorability depends on the property. “Generally, our market favors sellers, but it depends on the listing,” he says. “Some well-priced homes can see multiple bidding wars, while others may sit on the market for weeks.”
New listings posted year-over-year gains to close out the year, providing hope for 2024.
New listings are calculated in rolling 90-day periods, e.g., January 2023 data is the three-month period from November 1, 2022, through January 31, 2023. Redfin listings records date back to 2012.
10. Months of supply reached 3.4 months, its highest level since 2019
While inventory measures the number of homes currently available for sale, months of supply measures the amount of time it would take those homes to sell. Six months of housing supply is considered a healthy benchmark, with fewer than six indicating a seller’s market and more than six indicating a buyer’s market.
The average stock of housing supply across every month in 2023 was 2.4 months, up from 2.1 months in 2022.
Even though months of supply rose in 2023, it was still a very tight market; through the first six months of the year, just 1.4% (14 out of 1000) of the nation’s homes changed hands, the lowest share in at least a decade. The pandemic homebuying boom depleted supply, which has only barely started to recover.
“Months of supply gained some ground this year compared to last, reaching above 3 months in January, but still remained far below a balanced market,” adds Fairweather. “However, local market trends determined whether or not buyers or sellers had an advantage.”
Months of supply grew at its fastest rate year over year in history in January before falling until April.
Even though months of supply began increasing to close out the year, it still remained below a balanced market.
Supply is calculated in rolling 90-day periods, e.g., January 2023 data is the three-month period from November 1, 2022, through January 31, 2023. Redfin supply records date back to 2012.
11. New construction fell as builders were left stuck with inflated inventory
There were 1.41 million privately-owned new homes built in the U.S. through November 2023, down from 1.55 million in 2022.
Many home builders who snatched up land during the pandemic to capitalize on the supply crunch were left stuck with homes they couldn’t sell this year. This is a stark difference from 2022, when new construction blossomed following the pandemic supply crunch.
“If you’re a buyer, consider new construction homes,” advises Kim Stearns, a Northern Idaho Redfin agent. “Because of an inventory buildup, many builders have one to four homes they would love to close on and will often offer incentives.”
New construction slowed before rising later in the year, as inflation cooled and more homebuyers entered the market. Experts predict new construction will continue rising into next year.
Over 73% of new builds were single-family homes, up 8% year over year.
12. Home sales fell more than 18%, hitting record lows
Just 4.59 million U.S. homes sold through November, an incredible 18.3% drop from the 5.62 million sold in 2022 during the same period.
Year-over-year home sales were negative every month in 2023. However, the declines shrunk from a low of -37.5% in January to just -4.8% in November, showing a promising upward trend leading into 2024.
Unfortunately, existing home sales, a measure of how many homes that have sold at least once are expected to sell in a year, have fared much worse. In general, between four and seven million existing homes sell per year, with the historical average sitting at just over 5 million. In 2023, experts predict just 3.82 million existing home sales, a 7.3% drop from 2022 and the lowest annualized amount since August 2010.
Just 278,000 homes sold in January, the lowest amount since 2012.
In May, the number of active listings dropped to 1.4 million, its lowest level on record. Fewer listings helps boost bidding wars and further deter buyers, impacting sales.
While pending sales rose in November, closed sales fell through at a record rate to close out the year.
13. Median days on market soared beyond one month as the market cooled
In 2023, homes spent an average of 37 days on the market,a full ten days more than 2022.
Supply started dropping dramatically during the pandemic due to supply chain issues, rising demand, and a chronic lack of homebuilding. However, supply began inching upwards part way through 2022, as mortgage rates rose and fewer people entered the market.
In 2023, slowly rising supply paired with high home prices and mortgage rates led to an increase in time on market in most metros. However, more affordable areas saw the opposite effect; midway through 2023, houses in Buffalo and Rochester sold over six times faster than homes in Austin.
“Inventory for Austin is currently sitting at an 8-year high, which corresponds with an increase in time on market,” observes Chris Daniels, a Redfin Sales Manager in Austin. “Inventory has climbed gradually throughout 2023, but many indicators are pointing towards this being the peak due to lower mortgage rates luring people back to the market.”
June and July were the busiest months of the year, with homes spending 29 days on the market.
By far, the slowest month was January, with homes spending an average of 52 days on the market.
14. 15% of active listings experienced price drops
15.3% of listings experienced price drops in 2023, up from 13.9% in 2022.
As affordability worsened and fewer buyers entered the market, more sellers were forced to lower prices. In some markets, sellers also had to offer additional concessions due to very limited demand. In fact, by November, more than one-third of all home sellers gave concessions – down from the record 45.6% in February but up from 27.6% two years prior.
“A great way buyers can lower the cost of a home is through seller concessions and buydowns,” advises Mike S. Rafii, a Regional Sales Manager at Bay Equity. “A common way to do this is by negotiating seller concessions to include money toward the buyer’s closing costs. The buyer can then use this money to buy down their interest rate – either permanently (for the entire mortgage term), or temporarily (for up to 3 years).”
In many markets, sellers need to do everything they can to secure a buyer. “To make a property more appealing, sellers need to have their homes in pristine condition to attract buyers,” suggests the Redfin Premier agents in Las Vegas. “In Las Vegas, sellers had to do everything under the sun, from paying closing costs to offering repairs, to get a luxury buyer this year.”
On average, price drops remained more common than any year on record, as limited affordability hampered buyers’ budgets.
Of all sellers who dropped their original listing prices in 2023, the average seller dropped prices by 4.5%.
The top five metros with the highest share of price drops in 2023
Data includes the aggregated average percentage of price drops out of all active listings in each of the 50 largest metropolitan areas.
15. Nearly 33% of homes were purchased with cash in 2023
32.7% of homes were purchased with all cash in 2023, up from 30.7% last year and the highest share in a decade. However, while the share of all-cash purchases continued rising, the number of cash sales fell year over year alongside all other sales metrics.
Affluent home buyers who can afford to pay cash are more apt to buy when mortgage rates are high. By paying all cash, they avoid interest rates altogether and secure a better deal. While these are helpful benefits, they also exacerbate inequality between people who own homes and people who don’t.
Cash purchases were especially common at higher price points. “The luxury market experienced a large influx of cash buyers this year, due to higher mortgage rates,” notes Jonathan Huffer, a Redfin Premier agent in Palm Beach.
In September, 1 in 3 homebuyers were paying all-cash, the highest share since 2014.
Inexpensive metros and top migration destinations saw the highest share of cash purchases.
Many of the most expensive metros saw the fewest all-cash purchases, including Oakland (17.3%), San Jose (19.1%), and Seattle (20.4%).
The top five metros with the highest share of all-cash purchases in 2023
Data is from a Redfin analysis of county records across 39 of the most populous U.S. metropolitan areas, dating back through 2011.
16. Luxury home sales experienced their largest year-over-year decline on record
In 2023, there were 549,750 luxury homes sold, down 23.8% year over year.
In January, luxury home sales fell a record 45% to their second-lowest level ever, continuing a rapid decline from 2022. Year-over-year sales remained negative every month, but slowly rose as the year went on. An average of 53,200 luxury homes sold per month in 2023, down 10.5% year over year.
Even as sales fell, luxury house prices continued to grow this year, topping $1.15 million in September, a new record and higher than any point in 2022. Nationwide, luxury home prices grew nearly three times faster than non-luxury prices but dropped in expensive metros as people migrated to more affordable areas.
Higher prices also meant less competition. “Higher prices weeded out many buyers in the luxury market and dropped competition nationwide,” notes Sam Chute, a Redfin Premier agent in Miami. “However, homes that did sell often sold quickly.”
Luxury homes are defined as the top 5% of listings by price in a given market. Values are three-month rolling aggregates ending on the date shown, e.g. November 2023 spans September, October, and November 2023. Data does not include the three months ending December 31.
17. Bidding wars fell in 2023
51.6% of homes had a bidding war in 2023, down from 54% in 2022. In general, bidding wars have been dropping as mortgage rates have increased. This has been especially pronounced in pandemic boomtowns.
In many markets, bidding wars were virtually nonexistent. “Due to high mortgage rates and low competition, buyers didn’t feel as much pressure to compete,” notes Desiree Bourgeois, a Detroit Redfin agent. “Sellers need to know that buyers are less tolerant of an overpriced home.”
Fort Worth (-23%), Austin (-17%), and San Antonio (-15.6%) saw the largest decreases in bidding wars year over year.
The top five metros with the highest percentage of bidding wars in 2023
Redfin defines a bidding war as when a home faces at least one competing bid.
18. Investors purchases dropped at a record rate
Investor purchases plummeted by a record 48.6% year over year in the first three months of 2023, which followed a 46.2% fall at the end of 2022. Both drops exceeded the previous 45.1% record fall during the 2008 subprime mortgage crisis. (Investor purchase records date back to 2000.) However, investor market share remained relatively stable throughout the year, hovering around 17%, below last year’s 19%.
The drop in purchases continued until the last quarter of 2023 but eased slightly as mortgage rates began to stabilize. Investor activity isn’t expected to rebound in the near future.
These sharp drops came just months after the record surge in investor activity that happened in the aftermath of the pandemic. In fact, all of the most dramatic falls occurred in the Sun Belt, where investor activity jumped the most post-pandemic.
Atlanta, one of the top metros for investors last year, saw a 60% decrease in investor purchases, the largest fall in the country – but things are starting to look up. “Following a decline for most of these past two years, investor activity has ticked up in Atlanta,” says Angie Lawson, a Redfin agent in Atlanta. “They’re now focusing more on buying land, flipping homes, and acquiring properties for rental income.”
Investors generally buy homes either to sell or lease and capitalize on low construction costs and high demand. However, when costs are high and demand is low, investors usually slow down purchases. That’s what happened this year; high mortgage rates, a lackluster rental market, and rising home prices left many investors with homes they couldn’t sell or rent.
Multi-family homes continued to be the most popular among investors, with single-family homes coming in second.
A record 40.5% of all investor purchases were starter homes (less than 1,400 square feet).
The top five metros with the largest investor market shares in 2023
Data is analyzed on a quarterly basis and includes all property types unless otherwise stated. Data is through September (Q3).
Looking forward
The 2023 housing market was hard for many homeowners and renters, but what does Redfin predict for 2024? Read our 2024 Housing Market Predictions to learn more.
