If you are planning on selling your home in the Olympia, WA area in 2022, you may be wondering
- When is the best time to sell?
- Is the market going to crash?
- Is there still time to make a good profit?
- Where is the market heading?
Here are my predictions based on the local market and the predictions from national experts along with tips to help you make the most of the 2022 real estate market.
Home Prices
In 2021, home price gains broke records, finishing the year with 20% annual gains on average in the Olympia area. Considering the historic gains averaged about five to six percent annually, this huge gain between 2020 to 2021 for home prices was impressive. It’s also unsustainable, in my opinion.
What affected Olympia’s home prices were:
- Low supply of homes for sale coupled with high buyer demand for housing
- Low interest rates
- Low unemployment
- COVID creating more virtual jobs where people could live anywhere
- Olympia’s relative affordability
Inventory
For 2022, I predict low supply and high demand will continue because for our market to get to a balanced market, the market would need an incredibly tidal wave of listings.
To express this disparity, in looking at November 2021’s numbers, to see a shift in market conditions from a seller’s market to a balanced market, the Olympia market would need to cut in half the number of sales and increase the number of listings over five times. To get to a buyer’s market, the number of listings would need to increase nine times.
New construction was a contributor to our market with listings but for the last several years, our market has not had enough new construction to meet the buyer demand.
Last year, about 88% of the listings brought to the market were resale homes. Of the 5,310 single-family home sales, only 617 were new construction. In other words, buyers will be relying heavily on existing homeowners to list their homes.
Predictions:
- Buyer demand will still be strong because of continued low interest rates, virtual employment opportunities, Olympia’s relative affordability and Olympia’s desirability as a great place to live.
- The strong seller’s market will persist with the main driving factor of low supply and high demand.
- Home prices will increase more modestly in 2022 to six to eight percent versus 20 percent.
Interest Rates
In 2020 and 2021, the national interest rates average for a 30-year loan were respectively 3.1 and 3.0 percent. Freddie Mac predicts 2022 interest rates to rise to an average of 3.5 percent. Fannie Mae predicts 3.3 percent.
Combined with rising prices, this uptick in interest rates could be enough to price some buyers out of the market, although I still do not see this as a huge influence that would significantly slow down the market. But interest rates, inflation, and consumer confidence all play a major role in the real estate market and affect buyer activity and can affect home prices.
When Should I List My Home?
Timing the real estate market is challenging, if not impossible. My advice is to list when the timing is right for you. Sellers have not missed their opportunity to sell and make a great profit.
I predict January 2022 will have a surge in new listings as many sellers will have waited until after the holidays to list. I think the next surge in listings will be in the traditional spring market and then fewer listings will come on in the late fall and winter of 2022.
Many sellers would ideally like to list when there are fewer listings (less competition) and high buyer demand. This is the part that is hard to forecast.
Buyers are looking for homes year-round, but sellers are not collectively listing year-round, therefore the market witnesses peaks in demand, bidding wars, and home prices.
My advice is to list when the timing is right for you. Sellers will do very well any month in 2022.
Will COVID Affect the Real Estate Market?
In 2020, I thought COVID would shut down the economy and the real estate market. It had the opposite effect. In fact, in 2020, I was the one pumping the brakes while my clients were pushing me to go out and take them out to tour homes! I was very concerned about the virus, but I was surprised that my buyer and seller clients were not. They wanted to continue with business as usual.
As we are coming up on two full years of the pandemic, I don’t see COVID stopping buyers or sellers unless there are government mandates that shut down business. This is not on the forefront of the minds of buyers or sellers.
How Long will this Seller’s Market Last?
As supply and demand are the main drivers of this seller’s market, it’s my opinion the Olympia area will remain in a strong seller’s market for 2022 and beyond.
Sellers, you don’t need to rush to list your home to capitalize on the market. All indications point to a very strong 2022 seller’s market in the Olympia area.
Tips for Selling in 2022
The good news is the market is still in favor of sellers. What has changed towards the end of 2021 and I’m forecasting will continue into 2022 is buyers will be less likely to waive home inspections, bid excessively over a priced-right home, and may be reluctant to waive their financing and appraisal contingencies.
For sellers to get the most from the 2022 market:
Prep your home for sale. Continue to clean, declutter, stage, and take care of known issues to prepare your home to show its best and to achieve the best price.
Consider having a home inspection. There are many benefits for a seller to conduct their own home inspection prior to listing.
- If there are small issues that can easily be fixed by the homeowner, that will smooth out future negotiations with a buyer.
- Knowing the condition of your home can prepare you for when the buyer conducts their home inspection and when the buyer negotiates with you.
- If there is a major repair issue, you will have the time to get bids from contractors and understand the scope of work. Again, this will help you with future negotiations with a buyer. Knowledge is power.
The only caveat with doing a home inspection prior to listing is that a seller is obligated to share the inspection report and disclose findings with buyers. But this information can give buyers the extra confidence in buying your home and can lead to a higher offer price, smoother inspection contingency period, and easier closing.
Prepare for back-to-back showings. For occupied homes, many sellers may choose to take a few days off and head out of town while their home is being shown because for priced-right homes, expect the first few days to be booked with showing appointments.
Price right for the market. Buyers know a well-priced home when they see it. Buyers today have been looking at homes online and touring homes for the last several months. They are experts at determining value because they are looking for a specific home in a specific area and/or price point. They can easily determine if your home is priced right for the market or not.
Evaluate the entire offer, not just the offer price. There are so many variables that make up a “good” offer including the buyer’s financing, loan type, lender, down payment, earnest money, close date, possession date, included contingencies, omitted contingencies, appraisal shortfall coverage, proof of funds, buyer’s agent, organized and complete offer are just some of the things I look for when evaluating offers.
So if the market is so hot, why do I need an agent to sell my home?
So glad you asked! You might even be thinking, “I really just need to stick a sign in the yard and I’ll have a ton of offers.”
There is more to real estate than just sticking a sign in the yard. Here’s why you’ll want a listing agent representing you in the 2022 real estate market:
How to prepare your home for sale. Most sellers are interested in getting the most any real estate market can bear for their home. This market is no different. Presenting a clean, organized home with great curb appeal will garner better offers. There may also be other prep work needed before you list your home such as getting the septic tank pumped and inspected. Having a well-organized listing is just as important as having a well-organized home.
As I work equally with buyers, I can share with you what features buyers are craving and what turns buyers off. I can help you highlight your home’s desirable features.
Pricing it right. Pricing is key and we will discuss how buyers will react to the list price, look at the property with an appraiser’s eye, and position your home for success in the market. (As a former appraiser, I know what appraisers look for and how they determine value.)
Professional and effective promotion. A couple of cell phone photos just won’t cut it in today’s market. Buyers want walk-through videos, backyard tours, and drone footage along with high-quality photos and captivating marketing.
Negotiations. Do you know the challenges of working with multiple offers? I listed a few in the tips above but buyers are continuing to be “creative” with their offers that can end up being harmful to you.
Excellent communication with the buyer leads to better negotiations for you. Because I also work as a buyer’s agent, I know what questions to ask buyers to bring out their best offer. In multiple offer situations, I manage the offers by updating the buyer’s agents to again, tease out the best offers.
In summary, my forecast for the Olympia 2022 real estate market is:
- Seller’s market will persist throughout 2022
- Home prices will go up 8-10 percent to about a $495,000 median home price by the end of 2022
- Interest rates for a 30-year mortgage will top out at 3.5 percent
- Buyer demand will continue consistently throughout 2022, making any time of the year to list your home advantageous to sellers.
- New construction homes will be a scarce and a challenge for buyers regarding extended build times, higher building costs, and lack of customization and finish selections.
- Real estate contracts and negotiations will continue to be complicated and detailed with many obstacles for both buyers and sellers. Both parties should have their own representation with an experienced and educated Realtor on their side.
VIDEO: 2022 Real Estate Predictions for Sellers in Olympia WA
Unless otherwise noted, statistics compiled by Coldwell Banker Evergreen Olympic Realty from NWMLS data. Statistics not published or compiled by NWMLS.
Unless otherwise noted, statistics based on our own proprietary market study. Information and statistics derived from NWMLS.