The Olympia real estate market for March 2022 continues to deliver record equity gains for sellers while buyers continue to forge ahead amidst rising prices and rising interest rates. Where is the market heading and what is the best path forward if you are considering buying or selling in the Olympia market? Take a look at the market stats and then see my top tips for finding success in the Olympia real estate market.
Median Home Prices
The rising median sales price in Thurston County continues to steal the show. Once again, the market is seeing 20%+ gains year over year and March is no exception: up 20.2% from March 2021 to $470,265.
Ownership Equity Gains
Homeowners are experiencing six-figure gains, and homeowners don’t have to be long-term owners to achieve this. Homeowners who sold their home less than two years from when they purchased their home are achieving on average $105,885 in gains.
Low Inventory Sparks Competition = Higher Sales Prices
Low inventory outmatched by high buyer demand is sparking higher and higher sales prices.
Olympia’s standing inventory is 41% BELOW March 2020! This is keeping the Olympia market in the deepest seller’s market on record.
The only bright spot here is new listings are coming to the market – not enough to shift the market in favor of buyers – but this March fared better for new listings than in the last two years.
Buyer Demand Still Strong
With more listings, come more sales. Buyers may not be feeling this but it’s true: this was a record March for closed sales, which was up 19.6% over last March.
Thurston County is Affordable
The University of Washington’s Runstand Center for Real Estate conducts quarterly assessments of affordability conditions in Washington’s 39 counties. Thurston County has long been among the most affordable of the largest counties in the state. Now Thurston County is the only “affordable” county along the most populous corridor in the state.
A number over 100 is affordable; under 100 is in the unaffordable range.
With more and more virtual workers able to live and work anywhere, many of these virtual workers are coming from more expensive markets and bringing their higher salaries to Thurston County where they see their housing dollars go further. This is lowering affordability for local Thurston County residents and they are feeling it.
Historically, Thurston County’s population rises when more expensive markets (to the north) have unaffordable conditions. Workers will commute, or in our current times, work from home in a more affordable market like Thurston County.
Competition in the Market
Buyers continue to battle to win houses. In just looking at the mutually accepted offers in my own firm, the competition shows:
- Average Number of Offers Per Listing: 4.6 offers per listing (compared to last fall of 1.8 offers per listing)
- % of Homes Receiving Multiple Offers: 77%
- % of Homes Sold Over Asking Price: 78%; and 19% at the asking price
- Average % Paid Over Asking Price: 11%
- % of Buyers Who Guaranteed to Pay More than the Appraised Value: 68%
- Average amount Buyers were Willing to Pay Over the Appraised Value: $31,773 (or 6% of the purchase price)
How to Win the Bidding War
What is the secret recipe for a winning offer? It all boils down to who the seller believes can close the sale. This means the seller may not choose the highest offer but will choose the offer with the highest probability of closing and closing without a hassle.
Finances
- Having iron-clad financing in place. (Working with a local lender, having a stable loan type, large down payment, providing proof of funds.)
- Covering a potential low appraisal with additional cash as a down payment.
Home Inspection Contingency
Home inspection contingencies are being used by buyers in a variety of ways. Of course, as your Realtor, I always have to recommend buyers conduct inspections but here are some options buyers are doing in 2022:
- Conducting a pre-inspection before submitting an offer. The purpose of this is to then submit an offer without an inspection contingency, making the offer more appealing to a seller.
- Conducting an inspection after the seller accepts the offer but 1) shortening the time period for that home inspection and 2) offering a pass/fail inspection, meaning the buyer is either accepting the home in as-is condition or is terminating.
- Waiving the home inspection contingency.
Terms
- Offer price – for March, the average over the list price was 11 percent and buyers should be prepared for this type of competition.
- Earnest money – having a large earnest money amount, 2% of the purchase price or more, is attractive to a seller.
- Escalation Clause versus Highest and Best – some sellers and their listing agents have a strong preference and this is where your buyer’s agent would find out. What does the seller prefer? Escalation clauses have their own set of problems and some listing agents do not want them included in the offer.
- Close Date and Possession Date – a seller may want post-closing possession, meaning you purchase the home but the seller remains in the home after closing.
Selling Your Home First Before Buying
Buyers who do not need to sell their current home before buying are able to submit more compelling offers. Many homeowners are selling their homes first, finding temporary housing, and then are looking for their next home – all to get rid of a home sale contingency.
There are many ingredients that make up a winning offer and it can be challenging to find the right mix of price, terms, and contingencies that make your offer irresistible to a seller. And this recipe changes with each seller. Working with a buyer’s agent who will communicate with the listing agent will give you an edge.
Seller Challenges
Yes, there are sellers in this market who have challenges and are not aligned with the market conditions.
Some sellers are in love with the idea of a bidding war and sometimes can alienate a great buyer. An example of this happened when the buyer submitted a full-price offer to the seller who had been on the market for two weeks and there were no other offers. (Why would a buyer offer more in this situation?) The seller wanted a bidding war and wasn’t getting a bidding war so the seller countered and asked the buyer to pay more for the home. Even in this market, that buyer was livid and walked away.
Pricing Right
In this market, pricing right is difficult. Some listings are underpriced either by design or by ignorance, which can create fervent bidding wars escalating the price higher than what it should be; or some listings are overpriced and are ignored by buyers. Almost 11% of the listings last month needed a price reduction because they were rejected by the market as being over-priced.
Not Preparing the Home
Sellers still need to prepare the home for sale. This includes the typical declutter and clean regime; taking care of pre-inspection items like getting the septic tank pumped and receiving the county paperwork; repairing known issues.
Consider Providing a Professional Inspection Report
For some properties, providing an inspection report can help vet out the fittest buyers. The more information buyers have about a property, the more confident they are in submitting strong offers.
My own market observation: Stop the DIY Paint Projects
In my own home touring with buyers this year, I believe I’m seeing evidence of how the lockdowns affected homeowners. I don’t think I have seen so many poor painting projects gone awry as I have lately. Homeowners have painted everything from vinyl floors, bathtubs, countertops, interior doors, kitchen cabinets, window casings, and light fixtures. This is not appealing to buyers – please put the paintbrush down.
In Summary and What’s Next for Buyers and Sellers
If it is your goal to buy or sell a home in 2022, be ready and be prepared.
As a buyer, you may be asked to make big decisions in a short amount of time. Gathering the facts will help you make good, quality decisions. For example, this may mean knowing the area, the neighborhood, the school district, the condition of the home, your budget, and your risk tolerance.
For sellers, cutting corners in this market can cost you in profit. Continue to prepare your home to make it irresistible to buyers and give buyers the confidence your home is trouble-free. Confident buyers will submit very strong offers.
Interest Rates
Interest rates hit a national average of five percent for a 30-year fixed-rate mortgage in April (with 0.8 fees/points) according to the Primary Mortgage Market Survey from Freddie Mac. Last year, rates averaged 3.04 percent.
Despite this sharp increase in interest rates, home buyers are not slowing down. In fact, this has propelled many buyers to lock in a rate now before rates increase further.
Prices nor demand have moderated in response to the higher interest rates. The demand for housing continues to remain solid.