The Spring 2023 real estate market is off to a sluggish start but it’s not because buyers have hit the pause button – it is the lack of sellers coming to the market. This is creating a steep seller’s market. The good news for buyers is right now we have a unique window of opportunity where contract terms are normal. Buyers are not having to waive all their contingencies in order to win but this window may be short-lived as more buyers are coming to the spring market and competing for fewer listings.
Median Sales Price
The 12-month trailing median home price for March is up 6.3% from last year to $500,000. This is an impressive gain considering March 2022 was hyper-competitive with buyers escalating home prices in order to win and were waiving every contingency they could. Interest rates a year ago were more favorable than today and averaged 4.25% last March for a 30-year fixed rate loan compared to today’s rate of 6.28%. To see this 6.3% price gain from last year frankly is surprising to me but this gain is closer to our typical gains, so it’s good to see some normalcy come back to the market.
Median sales prices have remained flat. Since December, the median sales price in Thurston County stayed at $500,000.
Why Haven’t Home Prices Dropped?
The reason why home prices haven’t collapsed is because our inventory levels are very low and we have more buyers than sellers, even with the higher interest rates. March had 399 pending sales and only 372 new listings came to the market.
We look at pending activity as those are the active buyers getting under contract. This imbalance of pendings to listings has created a strong seller’s market.
Thurston County’s inventory levels plummeted since January and the market is down to a 0.95 month supply. This means if the current number of buyers purchased the current number of listing available, it would take them less than a month to do that.
Interest Rates
Our market is certainly interest-rate-sensitive but buyers are getting used to the higher rates and are willing and able to buy. The national average interest rate for a 30-year mortgage loan has been falling since the first of March and is currently down to 6.28%. This is a good trend for buyers but we still have the problem of what are they going to buy? The higher interest rates have been tougher on sellers than buyers.
Inventory
Sellers have been very slow to put their homes on the market. They don’t know where they are going to move to and don’t like the fact that they are probably giving up a good interest currently on their mortgage however they are achieving very good gains.
In March, there were only 300 homes actively for sale in the entire county and only 372 new listings came to the market. This is the lowest number of new listings to come to a March market for decades. And our population is higher now than it was 20 years ago.
Unique Window for Buyers Right Now
The market is very much in a seller’s market but is more favorable to buyers now than it was last year at this time.
- Terms are more normal. Buyers are facing competition for some listings but the terms we saw last year are not currently happening. Overall we are not seeing buyers waiving their home inspections nor their appraisals by bringing in more cash to cover a potential low appraisal. This is huge for buyers today.
- You can win even if you are not a cash buyer. The majority of home purchases in March were from buyers obtaining financing. In fact 81% of the sales were financed and that is ok.
- Home gains are returning to normal gains, which is moderating home prices and this growth rate is more sustainable than the 20% gains we were seeing.
Sellers are still doing exceptionally well today with equity gains.
The March 2023 sellers who were in their homes for 3 years or more, achieved on average 6 figure gains. Most sellers are in their homes for an average of 5 years and those sellers achieved over $212,000 in price gains. And look at those who sold in two years – they made over $96,000! That is very good and these gains can help sellers who can take that equity and put it towards their new home.
VIDEO: March 2023 Real Estate Market Update for Olympia, WA
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.