The real estate market in Olympia, WA for July 2020 finished with some surprisingly good market activity for both buyers and sellers. Below are all the stats and charts but click here for a recap of an interesting conversation I had with a neighbor about the market!
Overview of July for the Olympia WA Real Estate Market
For the first time since March (the start of the COVID-19 quarantine and shut-downs), more listings came to the market, which is good news for buyers. Buyers had a few more choices this month. Accordingly, the number of pending and close sales rose.
Can you believe that this July 2020 was the Olympia market’s 2nd best July ever for pendings and sales??
Sellers – What this market means for you
Low Inventory – High Demand
The market is still starved for listings. This month when there was an increase in listings coming to the market, we had more sales. Buyers are waiting for your listing to come online as buyer-demand is still going strong.
Inventory levels remain low
For July, the market only produced 324 listings. The Olympia market has been consecutively below 1,000 listings for the last three and a half years.
Multiple Offers
My firm has been tracking multiple offers and this month, our firm averaged 3.8 offers per listing with 81% of sales above the listing price.
As I’ve reported before, multiple offers can be exciting but sellers also have to scrutinize each offer in its entirety – not just the offer price – but also evaluate all the terms and verify the buyer’s cash and/or financing choice to choose the right offer.
For my sellers, I summarize the offers and share my conversations with the buyers’ brokers to get more information on their offer and their intent. The more facts you have, the better choices you can make.
Financing
As always, the financing the buyer is using is important to a seller. If the buyer is obtaining a loan, how do you determine who is most financially solid? As your listing broker, I have the experience to spot the red flags for financing. Here is what I look for when reviewing offers:
- Is the buyer’s lender reputable?
- Is the buyer pre-approved or pre-qualified?
- What is the loan type (e.g. VA, Conventional, FHA, etc.) and how does that affect the seller?
- Does the buyer need to sell a home in order to purchase?
- Asking the right questions to determine if the buyer can and will complete the sale.
With furloughs and lay-offs, a buyer who may have been financially qualified last month, may not be qualified this month. Vetting out buyers is crucial for a successful home sale, and excellent communication with the buyer’s broker and the lender is very important.
Appraisals
Appraisals have been a concern with some appraisers believing a) the market is flat, and b) the market is softening. There is no market data to support their claims and we are seeing erroneously completed reports.
As your listing agent, I will be notified when the appraiser will be at the property. I will provide a current market report for the appraiser and I’ll share with the appraiser the showing activity and/or how many offers were received to tell the whole story.
If the appraisal does come in low, I look to see if the appraiser made time adjustments for the sold comparables they used. I look to see how much the appraiser used to adjust for square footage, lot size, amenities, etc. Did the appraiser in their conclusion recognize our market as an increasing market? These are just a few things I look for, and as a past appraiser myself, I help sellers question low appraisals in the effort to have the appraiser reconsider and resubmit their report.
Buyers – What the Olympia summer real estate market means for you
As I work equally with both buyers and sellers, here is how I work with buyers to win in this competitive landscape.
Competition
As inventory levels remain low and buyer activity high, you may find yourself competing with other buyers but I have a few solutions to win the listing.
How to Win the Bidding War
Have your financial ducks in a row! This means having the most up-to-date preapproval letter from your local, reputable lender attached to your offer, and/or proof of funds if you are paying cash. Even if you are putting down a large amount, providing that proof of funds with your offer will help you win the bidding war over other buyers.
Terms. As your buyer’s broker, I will find out what terms the seller prefers. Do they prefer a longer or a shorter close date? Do they need to stay in the home after closing? Would they rather not move that pool table and instead include that in the sale? By agreeing to the seller terms, that will give you an edge over other buyers who may not be willing or able to do so.
Limit contingencies. Including a long laundry list of contingencies will clutter up the contract and shows the seller that you are not completely sure about buying their home. We can discuss what contingencies are available and what are most important to you.
Shorten contingency timelines. Instead of taking ten days to complete your home inspection, shorten that time period. The quicker you can satisfy contingencies, the better your offer will look to sellers.
Submit an organized offer. Incomplete offers, empty fields, or worse yet, handwritten offers (!) that are haphazardly submitted are just a huge turn-off to the seller. A poorly written offer reflects poorly on your ability to purchase. Make sure your REALTOR represents you as the serious and organized buyer that you are.
The surefire secret to get your offer accepted? Add this ONE FORM to your offer.
Increased Down Payment for Low Appraisal is THE form successful buyers are using to win the property. In this hot market, we have seen some appraisals come in below the agreed-upon price. Sellers know appraisals can be an issue. As a buyer, you can provide assurances to the seller by adding this form. It states you can bring in more funds at closing to bridge the gap between a potentially low appraisal and the agreed-upon sales price.
Yes, this does mean you have to have cash in your reserves to use this form. If you haven’t done so already, start building your reserves in case you need to add this form to your offer, and talk with your buyer’s broker on how and when to use this.
How long will this market last?
The Olympia market could remain a seller’s market for potentially years to come. And here’s why:
What would it take to get to a balanced market?
You can see from this chart above, the Olympia real estate market’s inventory is so low that it would only take 2 weeks to sell all the inventory to the number of buyers in the market. In order for the market just to get to balanced (4-6 months), the market would need to add 2,256 listings (just for this month) to boost inventory. This boost of inventory is very unlikely to happen in the immediate future. For July, the market had 287 listings. New construction has not been able to keep up with demand and the market is relying on sellers, like yourself, to add to the market and there are just not enough homes for sale.
On the flip side, if the market cannot gain more listings/inventory, then the sales would have to drop to just 72 sales per month. This month, the market had 564 sales.
These numbers are just to get to a balanced market – not a buyer’s market – just to a balanced market. Because of this huge disparity between the current seller’s market and a balanced market, I just don’t see the market getting to balanced any time soon.
How has COVID-19 affected the Olympia WA real estate market?
- Outside of the minor slow down in the market this past spring, buyers and sellers for 2020 have been more than willing to proceed with their real estate transactions.
- If the market had more listings, we would have more sales.
- Sellers have been slow to list their homes because their plans have been delayed due to their purchase on the other end. They may not have a home to move to; they may have tenants who cannot move; their relocation for their work has been delayed, etc..
- Financing has been a little trickier in just making sure buyers remain qualified but otherwise, buyers are taking advantage of the very low interest rates available to them.
- Thurston County is currently in Phase 3. Part of what this means for real estate is we only have can a maximum of 10 people gathered at once, so most have decided not to host open houses at this time. But we can continue to show homes, hire stagers, photographers, sign installers, contractors just as we did before while following social distancing guidelines, wearing face coverings, and washing our hands.
- Surprisingly to me, I haven’t found sellers to be hesitant to list their homes during the pandemic nor too many buyers who were concerned with touring homes. REALTORS are following the best safety protocols to keep everyone safe. This guidance comes from the CDC, our Northwest Multiple Listing Service and for those who are REALTORS, our national, state and local REALTOR organizations.
Conclusion
This market poses challenges for both buyers and sellers. My advice is for all parties to be prepared to enter the market. Every situation is unique and this is where I can offer my expertise and discuss the options and solutions that best fit your needs.
I specialize in working with both buyers and sellers in the Olympia area. If you are considering making a move, contact me today!
Be sure to check out my blog for more information and resources including:
My ultimate Buyer’s Guide.
My Cost of Living video for living in Olympia.
My five-part Seller’s Guide.