Everyone wants to know if this is a good time to buy or if it’s a good time to sell. Real estate markets are not good nor bad. The problem buyers and sellers face is they don’t want to operate within the parameters of the current market.
The market is like your fenced backyard – it has boundaries. The boundaries keep your kids and pets safe in your backyard and prevent them from running wild through the neighborhood.
There are some buyers and sellers who are the wild kids and pets running through the neighborhood. They are not working within the boundaries of the market, and they are not finding success – just a lot of frustration. These wild children and pets are sellers who price their home over the fence line, outside and above the market, and they are the buyers who think the market is a half-off sale at the Dollar Store.
Here are the boundaries and rules of the market so that you can sell your home for the most this market can give and buyers, you can find that right house at the right price.
The first parameter or fence line of the market you need to know is the median home price.
The trailing 12-month median home price is still at $500,000 for Thurston County. It has remained flat for the last six months but it is up 4.8% from last April. Sellers are still achieving gains and buyers have some breathing room on price. It’s not so bad in the backyard, is it?
The next fence line of the market is interest rates.
Interest rates for 2023 haven’t been too volatile. They have remained in the sixes and at the lowest this year they were at 6.09% and at the highest this year, they were at 6.73%.
The national average for a 30-year fixed-rate loan is currently at 6.35%.
Experts predict rates should go down and we may see rates in the fives by the end of the year. Rates are settling down. This makes it more palatable for sellers who don’t want to trade in their 3% or 4% interest rate for a 6% rate yet is also a better time for buyers who were dealing with rates in the sevens last winter.
The next fence line in our market is inventory.
Inventory is the most influential section of the fence. Our low inventory of just 1.05 months of supply is keeping home prices high because the low inventory is coupled with higher buyer demand.
Pending sales show the number of successful buyers getting under contract. Last month, we had 369 pending sales. Compare that to the 352 new listings that came to the market in April and you can see that there are not many choices for buyers.
This low supply and high demand is keeping the market in a seller’s market. This means that the market is favoring sellers over buyers. The good news for buyers is although terms need to be competitive, terms are more normal. Buyers can have home inspections and not be forced to waive other contingencies like last year in order to win.
The last section of the fence ties all of this together.
Sellers, overpricing your home gets you the opposite of what you are hoping to achieve. In order to get the most money from this market, sellers should price right for the current market. Sellers should prep their homes for sale by cleaning, taking care of deferred maintenance issues, and getting the main components of your home serviced like your HVAC system and the septic system.
The buyers I see today are having a hard time accepting the home prices. They are not seeing value in the homes and they end up getting totally frustrated. And then when there is competition for a home they think is priced too high, then they really want to quit.
My advice for buyers is to understand that real estate is the long game, meaning this is an investment that you will be living in and enjoying and will be earning money for you in the long term. Where do you see home prices in 2028? Do you think home prices will be higher five years from now? Yes, most likely they will be higher and you wished you purchased sooner.
The market is workable. It is not an impossible market for buyers yet it’s a market that is achieving strong equity gains for sellers.
If you are considering making a move to or from Olympia, contact me today.
VIDEO: April 2023 Real Estate Market Update
Unless otherwise noted, statistics compiled by Coldwell Banker Evergreen Olympic Realty and/or Francine Viola 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. Interest rates quoted from FreddieMac.com/pmms.