2021 Real Estate Market Predictions for Buyers | Olympia WA

Buyers in 2021 may see a repeat of 2020 with rising home prices and low inventory but interest rates continue to remain low, helping buyers achieve their homeownership goals. Here are the 2021 real estate market predictions for BUYERS in the Olympia, Washington area. (For the 2021 SELLER predictions, click here.)

Home Prices In Olympia WA

Western Washington has seen a decade of price gains.  In 2010 for Thurston County, the median sales prices hovered at $230,000.  Now ten years later, the median home price is 65% higher at $380,000. 

There is a two-fold message here. First, these homeowners achieved very good gains ten years ago. Looking ahead ten years in the future to 2031, I expect home prices to be much higher than they are today, so it is still a good time to buy. Although buyers are feeling the price shock of today’s home prices, buyers will be glad they purchased their Olympia-area home now.

Second, in looking at the neighboring counties, Thurston County was the lowest as far as gains over the last ten years. This moderate and sustainable growth has continued to offer affordable housing to buyers. Today Thurston County remains one of the most affordable counties along the I-5 corridor and is predicted to continue to do so.

2021 Prediction on Home Prices

Annual median home prices in Thurston County to increase by 8% to 10%, much higher than the historic 5% to 6% average annual gains.

Mortgage Rates

Low mortgage rates have helped buyers by absorbing the sticker-shock of higher sale prices. Although sales price is important to buyers, buyers should focus on their monthly payment. A sales price of $400,000 versus $425,000 at a 2.8% interest rate is about $103 more in principal and interest each month. It’s a minimal monthly increase considering it’s a $25,000 home sale increase.

2021 Prediction on Mortgage Rates

The Federal Reserve has voted to keep the mortgage interest rates low through 2022. Freddie Mac’s Economic & Housing Research group forecasts that mortgage rates will average 2.9% through the end of 2021, which is good news for home buyers. These average rates are for a 30-year fixed-rate mortgage with an average cost of 0.7% in fees.

Inventory and Home Choices for Buyers

Low inventory will continue for 2021. Buyers will be in multiple offer situations where submitting offers over the asking price, limiting contingencies, and covering appraisal shortfalls in cash will be the norm.

The reasons for low inventory are many:

  • Not enough new construction.
  • Existing home sellers stayed off the market due to the pandemic.
  • More buyers than sellers. Buyers were not sidelined by the pandemic and came to the market in force. The usual life events for buyers wanting to move remained the same (marriage, changes in family size, retirement) but one more life event was added to the mix that brought more buyers to Thurston County: work-from-home options.

During the pandemic, more buyers came to the market to escape their urban locations in favor of the suburbs and rural housing. With commuting no longer a consideration, buyers also looked at vacation properties as their next full-time home. The Olympia area also saw many out-of-state buyers who came here to take advantage of Thurston County’s relatively affordable housing.

2021 Prediction for Inventory

Inventory in the Olympia area and Thurston County will remain low with a slight uptick. This uptick won’t be enough to ease the competition for buyers because the number of buyers will quickly absorb those inventory gains.

The market is far from getting to a balanced market let alone a buyer’s market. Buyers may have to wait for years to see another buyer’s market like the Olympia market of 2006-2008.

Tips for Buyers in the 2021 Olympia Real Estate Market

The good news is mortgage rates are low and new listings are coming to the market daily. The downside is buyers will still need to compete for these listings in 2021.  Here are some tips for succeeding:

  • Use a brokerage site to search homes for sale. Third-party sites like Zillow, Trulia and Realtor.com don’t always list everything that is available for sale and will list off-market homes as for sale. You wouldn’t use a hammer to cut down a tree – use the right tools (www.francineviola.com) to get the most accurate information. (Click here for more on this and my video on the pitfalls of using third-party websites.)
  • Know the area where you are buying. I work with many buyers who want to buy a home in the Olympia area but they have never been here before. Plan a trip to tour the different towns and neighborhoods of Thurston County and/or find a temporary rental like an Air B&B to get the know the area and tour homes in person.
  • Have your financing in order. Whether you plan to pay cash for your next home or get financing, have your funds ready. For borrowers, being approved by a local, reputable lender will help you win the bidding war. Talk to me for local lender referrals that will put you ahead of other buyers.
  • No home inspection or pass/fail inspection. Many buyers are either waiving their home inspection contingencies or their home inspections are pass/fail, meaning buyers will either accept the property in as-is condition or will terminate. This pass/fail strategy removes the option to negotiate repairs or credits with the seller. For some properties and for some buyers, this pass/fail option is an acceptable risk.
  • Shorten contingency timelines or remove contingencies altogether.  If the boilerplate language for a particular contingency is 10 days, shorten that to 5 days, for example.
  • Waive non-essential contingencies and submit a streamlined offer. Non-essential contingencies vary with each buyer. What one buyer believes is non-essential is absolutely essential for another, so as your buyer’s agent, we’ll need to discuss your best route but the takeaway here is to submit a clean offer with only your most essential contingencies.
  • Cover appraisal shortfalls with cash at closing. With buyers submitting offers over the asking price, the seller wants to be assured that buyers can complete the sale. Buyers who can guarantee that a low appraisal will not derail the transaction will have an edge over other buyers. Including this addendum in the offer means buyers need to have the funds, in cash, ready in case of an appraisal shortfall.
  • Get your offer in before the review date. Here in Thurston County, sellers will indicate the date they will review offers but sellers have the right to accept an offer prior to the review date. Submit your offer as soon as you can in case the seller reviews sooner.
  • Submit your highest and best offer; don’t rely on the seller countering your offer. With most sellers receiving multiple offers, they will simply select the best offer without countering. Submit your best offer, including offer price and terms, because you may not have another opportunity.
  • Understand the seller’s perspective to write a better offer. Some sellers will have a preferred close date and/or move-out date, or maybe they have a pool table that they don’t have to move and it will stay with the house, for example. If buyers can accommodate the seller with their requests, buyers will have a better chance at an accepted offer.

Conclusion

With the optimism of the vaccine on the horizon and an improving economy as more Americans are vaccinated, the 2021 Olympia real estate market is expected to be just as robust as 2020, if not more. The market just needs to improve its inventory numbers because the buyers are here and are ready to buy.

Are you thinking about selling in 2021? Click here to see what’s in store for Olympia sellers this year.

Video: 2021 Real Estate Market Predictions for Olympia WA BUYERS

Unless otherwise noted, statistics compiled by Coldwell Banker Evergreen Olympic Realty from NWMLS data. Statistics not published or compiled by NWMLS.

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