Why this Seller’s Market is Different this Time Around in Olympia, WA
Today, the Olympia, WA real estate market has more buyers entering the market than sellers. The demand from buyers is overwhelming the lesser supply of sellers listing their homes, creating a market that favors sellers.
In the last 20 years in this Olympia, WA real estate market, there has been only ONE other year that started off better for sellers, and that was 2005. However 2005 was a different kind of market that started the decline of the market for the next several years.
First Big Difference
In 2005, the demand from buyers abruptly stopped. Notorious lenders had been artificially stimulating the demand by granting loans to many people who couldn’t afford them. This put more buyers into the market (that shouldn’t have been) and created a false seller’s market. Once this problem came to light, the demand dropped off overnight. This did not favor sellers and the market was headed into a deep recession.
Today, lenders are offering mortgages that are properly underwritten. This means lenders are working more diligently to qualify buyers, asking for more documentation, and in my opinion, are acting more responsibly.
These qualified buyers are purchasing homes at an increasingly swift pace. In January 2016, the Olympia, WA area logged a record number of sales for that month. This is a continuation of a positive pattern that started a year ago. There is significant pent-up demand in the Olympia, WA real estate market, and it is finally unleashing.
Second Big Difference
In 2005, the national builders had an insatiable appetite to build. They were about to put an unprecedented amount of new homes on the market. Money from investors and commercial lenders was pouring in to home builders and little attention was paid to a market’s sustainability and its limits. That led to overdeveloping throughout 2005 and 2006. The market turned south before most of these could be sold. The result put too much inventory on the market.
Today, we have absorbed the excess inventory from those days. Foreclosed new construction neighborhoods are nearly built-out, and new projects are not keeping up with demand. In 2014, there were less than 1,000 permits issued for new home construction. We need nearly 1,700 new homes built each year just to keep up with the Olympia, WA area’s population growth. Competition for sellers should remain low for some time to come.
The net effect
This sets up to be the best year ever for Olympia, WA area sellers looking to make their next move.