Last year was the year of two different markets: searing hot in the first half and cool in the second half as interest rates skyrocketed and doubled. This year is sputtering to heat up but the fluctuating interest rates, low inventory and still strong demand are setting 2023 off to a rollercoaster start.
Homes Prices
The trailing 12-month median home price for January in Thurston County is $500,000. This is up 8.7% from last year at $460,000, which is still above average for our market. Historically, Thurston County sees a 5 to 6% annual home price increase. This is a healthy gain for home sellers.
Home Equity
Speaking of healthy gains, home equity remains near record levels. A recent Core Logic report shows 98.1% of US mortgaged homes have positive equity. The average loan balance is just 43.6% of the home’s value. We are seeing similar numbers here in our area. That’s historically a tremendous amount of equity for home sellers. Even homes that receded in value last year have not lost the huge gains of 2021. That equity, more so than interest rates, is empowering people to make their dream move.
A fun fact
Olympia area owners who have owned their homes for 7 years have achieved on average almost $270,000 in price gains since they purchased.
Limited Supply
Inventory is still very low, which is great for sellers but is tough on buyers. This January ended with 379 homes for sale but last January, there were only 124 homes for sale in the entire county. That didn’t give many choices for buyers last year.
Buyers who are hoping for a balanced or a buyer’s market may have a long time to wait. For the Thurston County market to get to a balanced market, another 1,500 listings per month would need to come up, and we don’t forecast that in the immediate future.
Competition – Market “Feels” Easier for Buyers
In comparison to the very competitive spring last year, this market feels easier for buyers because terms like home inspection contingencies are back but buyers, you can’t be fooled and rest on your laurels!
Many homes this first quarter of 2023 may have other buyer competition and competitive terms may come back such as offering over the list price, guaranteeing to cover a low appraisal, and waiving contingencies. This thought is taking some buyers by surprise. Be prepared that for some homes, there will be other buyers vying for the same home. Over a third of our contracts this month had multiple offers.
Interest Rates
The Federal Reserve announced on Wednesday, February 1st that they modestly raised rates by a quarter of a percentage. The good news is this slight increase signals that inflation is moderating and that’s a good sign. But a bump up in the Fed’s rate affects mortgage rates.
Higher interest rates can stop buyers from buying homes and can lead to home prices dropping. This is what happened the last half of 2022.
The lending market is fluctuating quite a bit but since the peak of mortgage rates in November of 7.08%, mortgage rates have been going down. The national average for a 30-year mortgage is currently down again from the previous week of 6.13% to 6.09% according to Freddie Mac.
Affordability
Thurston County, along with being a great community, offers relatively affordable housing compared to our counties in the north. King County, where Seattle is located, had a 2022 median home price of $815,000. Pierce County, where Tacoma is located, ended last year with a median home price of $545,000. This map and data were provided by the NWMLS.
In Conclusion
This year is starting off stronger than 2022 ended. The dip in interest rates was enough to bring buyers back and for buyers who also have large equity gains from their home sales, they are capitalizing on this current market. I predict the market will be busy but not at a frenzied, out-of-control pace like in 2021 and the first half of 2022.
If you are planning on making a move this year, contact me today. I’d love to hear about your plans for buying or selling in Thurston County.
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.