The words “typical” and “real estate market” haven’t been used in the same sentence these past two years as the market has been anything but typical (a pandemic, extremely low inventory rates, high buyer demand, and now add inflation and higher interest rates). Typical days may be ahead, but “typical” doesn’t mean a market crash.
Here are the market stats of the Olympia area real estate market and what this all means for buyers and sellers.
Home Prices
Home prices are still up significantly from last June but prices are easing up. This doesn’t mean the market is crashing and prices are falling – it means sales prices will continue to rise but not at this steep pace.
From last June to this June, the median home price in Thurston County is up 17.5% to $484,532. If 17.5% seems low to you, that’s because year-over-year gains have been over 20% since November 2021. But 17.5% is an excellent gain.
Home Price Gains – a Quick History
If you can believe it, the Thurston County market historically has had 6% to 8% average annual price gains. The only time the market has been higher than 12% annual gains was in early 2021, and then gains really caught on fire and gains were over 20% since November 2021.
The “typical” Thurston County market achieves more modest gains. The direction is still going up but just not straight up. Modest gains are good for longer-term sustainability.
Homes for Sale
More sellers list their homes in the summer months and this June is no different. This June had 746 new listings come on the market. Compared to past Junes, this was the second-highest June for new listings.
The month ended with 582 listings actively for sale. This is higher than it has been since 2019 however you can see that this still is keeping the market in a seller’s market.
Interest Rates
Interest rates experienced the steepest and quickest climb of mortgage rates in history dating back to 1971.
Despite steadily increasing rates, the year began with record sales through May. As rates spiked up in June, more buyers hit the pause button.
Pending Homes Sales
With buyers pausing in June because of the higher interest rates, this was reflected in June’s pending sales. This June was the lowest June for pending sales since 2015.
But this is still a healthy number of pending sales considering interest rates were the same in 2003-2008 as they are today.
Competition
More listings will cause an ease in competition but this summer, the market is also dealing with higher interest rates. Buyers were accustomed to rates in the twos and threes so the jump to fives and sixes is dramatic.
One note about the reaction to interest rates from buyers:
- Buyers will either hold off buying a home/be priced out of the market and home prices will slow down, or
- Buyers will adjust and will realize the market will continue on without them (like the market did at the beginning of COVID)
Last June and this June had a similar percentage of listings receiving more than one offer. March this year was the most intense competition for buyers.
More cash buyers are coming to the market. Some cash buyers have chosen to finance their purchase because money was (and still is historically) cheap to borrow, reserving their cash. Now with higher interest rates, the market is seeing a slight uptick in cash buyers. The other loan types remained the same.
“Should I Buy a House Right Now?”
Buyers have been watching home prices and are considering if now is the right time to buy a house. Certainly no one wants to buy a home now and wonder if the value of it will drop, and this question is top of mind with buyers.
Homes will continue to appreciate but not at the recent rocket speed upward. There is no doubt that home prices will be higher next year and the years after. Instead of 20% gains, the gains will be more modest at 10% to 12% annually.
There are decades of data that shows real estate is a very strong asset and that is not changing. Real estate is a very viable way to build wealth and will continue to be so.
Yes, you should buy a house now or when most buyers buy – when they experience a change in career, finances, and/or household size.
“Did I Miss my Window to Sell My Home?”
No, sellers have not missed their window to sell but as of today, the market is not in the frenzy as it was in March this year.
With the higher inventory, homes may be on the market for more than a few days and sellers can expect to receive fewer offers but…these listings are selling for more than what they would have last year.
Even though the market is seeing price reductions, home values are still increasing for sellers year-over-year.
Bottom Line for Buyers
Buy when the time is right for you and your circumstances because timing the market is impossible.
Right now, buyers have more leverage in the marketplace with more listings and sellers who are panicking a little bit because their homes may be on the market for longer than expected. If you can, this summer is a great time to take advantage of higher inventory levels, and many buyers will find they will not be in a competing situation.
As inventory levels go down in the fall and winter months, buyer competition may heat up again.
Fewer buyers are feeling the pressure to waive important contingencies like their home inspections, which is very good news.
The use of our additional down payment for a potential low appraisal form is trending down. This is the form that was a must-have in order to compete where buyers would bring extra cash funds to cover a potential low appraisal.
Bottom Line for Sellers
Sellers are achieving excellent equity gains – more than they ever have. Gains will trend down but achieving twice to triple the historic average of gains will still be achievable this year.
Pricing this summer is critical as buyers will ignore over-priced listings, however, homes are still selling for a premium. Having an aggressive list price and a high-quality presentation to buyers will create that urgency and competition from buyers.
Conclusion
As always, I’m available to discuss your particular and unique needs in this ever-changing real estate market. Call me today if you are looking to make a move.
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.