How to buy and sell a house in the Olympia Washington area. Here are the monthly real estate stats and what they mean for you if you are looking to buy or sell.
The Supply of Homes For Sale
This continues to be the story for real estate buying and selling in 2021 and most likely will continue for quite some time. Everyone is waiting for this “bubble to burst” or the market “to crash” and unless inventory levels increase and buyer demand decreases, plan on this hot seller’s market for a long time to come.
In order to get to a balanced market, the Thurston County real estate market would need 1,500 listings added overnight and every month thereafter to meet the current buyer demand.
In February 2020, before COVID restrictions hit, Thurston County started positively with 393 new listings. This February, this is down slightly with 348 new listings. But these new listings are being purchased leaving our STANDING INVENTORY at extremely low levels.
Thurston County’s February 2021 standing inventory (of homes actively for sale) is the second lowest month on record.
With not enough new listings coming to the market to meet the buyer demand, this is the main factor that is continuing to drive up prices.
How Buyers are Competing for Homes
In these first ten weeks of 2021, I’ve seen a big shift in buyer behavior. I think this is a little pent-up frustration from buyers losing out on homes in the previous months and buyers today are much more aggressive with their offers. Here’s what I’m witnessing:
Offering over the asking price
Last year, buyers who were offering over the list price were modestly going above the list price – on average of one to two percent of the list price.
This year, buyers are offering five percent, ten percent and even more over the asking price to beat out other buyers.
Buyers Have Cash Reserves
Offering a big offer price isn’t going to win over a seller unless the buyer can back that offer up with cash. This is where buyers who have cash reserves will win over other competing buyers.
If a buyer offers $50,000 over the asking price and they have $50,000 in cash to bring in closing IF the home does not appraise, that buyer would have a strong, compelling offer for a seller.
This is one of the single biggest factors that can determine which buyer can win the bidding war – can they back up their over-the-list-price offer with cash?
Buyer Financing
Some buyers think they are losing out to all cash buyers. In Thurston County, that may not be the case. In looking at the sales in the last six months in Thurston County, only ten percent of the transactions were from all cash buyers.
BUT…..this doesn’t tell the whole story. Even though most transactions are financed, many of these buyers also have large cash reserves to cover a potentially low appraisal.
What Olympia, WA Sellers Want
Sellers are wanting buyers who can offer nearly iron-clad offers; offers that are guaranteed to close. Anything buyers can do to instill this kind of confidence with a seller will win. This doesn’t mean writing a letter to the seller (see why that is not a good idea). This means:
- If buyers are offering more than the list price, sellers will want to see the buyers have the cash to cover a potential low appraisal (thereby guaranteeing that a low appraisal will not derail the transaction).
- Preapproval letters from local, reputable lenders
- Buyers that have gone through underwriting with their lender
- Proof of funds with the offer
- Fewer contingencies
- Shortened timelines for contingencies
There are Price Reductions Even in this Market
Believe it or not, there are homes that are overpriced and sit even in this hot seller’s market. Currently, almost 35% of the active homes listed for sale in Thurston County have been on the market for more than two weeks. With most sellers accepting offers in less than five days, two weeks is a relatively long time to be on the market. And these aren’t just $1 million+ properties that are sitting on the market – they are in all price ranges.
Sellers, it is still important to price for the market, and if buyers see the value, they will compete and bid it up.
What Sellers Don’t Realize About Buyers
Sellers don’t realize how smart and savvy buyers are in today’s market. These buyers have been looking at homes online for months; they have toured homes; they have written offers on homes and have lost; they are getting to know the market VERY WELL. This kind of real-world knowledge is something sellers do not have (unless sellers are looking to buy in this same market).
Buyers will ignore overpriced listings. Buyers know value because they are dialed into this market. Of the homes that have sat on the market for more than two weeks, 16% have done one or more price reductions. I would expect this to be a higher number but these sellers may be willing to wait for their price.
The goal for buyers, in this case, is to look for homes that have been on the market for a couple of weeks and submit an offer to the seller before they do a price reduction. These buyers then won’t have competition because other buyers have already passed on this property.
Median Sales Price
With historic average home gains being 5.5% per year, this year, median home prices are up 12.4 percent.
Equity Gains for Sellers has been Big
Owners who purchased between eight and nine years ago and sold this year, sold for on average over $180,000 more than their original sales price.
Is Now a Good Time to Buy or Sell?
Buyers and sellers make moves usually because of major life events – career, lifestyle, family status changes – and that still holds true today.
More buyers are interested in Thurston County because our county still offers one of the best affordable counties along the I-5 corridor. That along with the fact that many buyers are able to live and work remotely has brought more out-of-area buyers to Thurston County than before.
Homeowners who want to sell are needing to find their next home, but homeowners who need to sell in order to buy do have some advantages over other buyers because most will have large equity gains to use towards their next house. This goes back to having large cash reserves available to back up an offer over the asking price.
If you need to sell first in order to buy, check out this post on your options:
Is now a good time for you to buy or sell? Contact me today and let’s talk about it. If you are considering buying or selling in the Olympia, Washington area. I’d love to have a conversation with you!