The May 2021 Olympia, Washington real estate market continues on its hot streak. Sellers are getting their price and then some as the market continues to deal with low supply and high demand.
Home Prices in Olympia, WA for May 2021
The median home price in the greater Olympia and Thurston County area is up 23 percent from last year to $452,000. These annual gains are impressive considering our historic average gains are five to six percent.
The driver of these rising prices is supply and demand. Today, we have just a 14-day supply of homes. This means if we took all the buyers and all the homes available for sale, it would take just 14 days to sell all of them. A balanced market is 4-6 months of supply and today we have just 2 weeks of supply.
This short supply of homes equates to 175 single-family homes for sale last month compared to last May where we had a whopping 326 listings. But this is far from a balanced market. A balanced market for us is closer to 2,000 homes for sale per month.
What Can Buyers Expect in the Olympia Market?
Competition and Bidding Wars and Paying Over the List Price
Competition is one of the bigger hurdles for buyers and crafting offers to beat out others is challenging. In Thurston County, buyers bid 107% list price : sales prices. And in fact, for the last two years, the average list to sales price ratio has been over 100%. In other words, buyers have been paying over the list price for every month for the last two years.
Low Supply but More Choices
The number of new listings that are hitting the market has increased. The Olympia market had 529 new single family home listings come to the market in May. This is an 18% increase from last year but last year at this time, we were deep into COVID restrictions. But COVID didn’t really stop our market much. Some sellers were hesitant and put off listing their homes but buyers were still very busy.
Low Interest Rates
For buyers and current homeowners is the continued low interest rates. In looking at mortgage rates from http://www.freddiemac.com/pmms/, rates are still right around 3 percent for a 30-year fixed rate mortgage (with average 0.7 points/fees). According to Freddie Mac’s Economic and Housing Research Group, today in June is the first time in ten weeks mortgage rates have risen above 3 percent. They predict rates will gradually continue to rise in the second half of the year.
If you are considering buying a home or refinancing your current home, don’t delay – now is the time.
What Can Sellers Expect?
How Long Will This Market Last?
For sellers, this market welcomes your listing! Although we can’t predict how long this market will go at this pace, we are fairly certain this low supply and high demand environment isn’t going away anytime soon. The pace of increase may temper a bit but this simple principle of supply and demand will continue to drive prices up.
The supply of homes for sale most likely isn’t going to change because there isn’t enough new construction to fill the pipeline. So we have to look at demand. Will the demand for housing change? Will there be fewer buyers? What can change demand is if buyers get priced out of the market by either rising home prices or rising interest rates or both.
Multiple Offers
Since we only can track multiple offers in our own office, in the last four weeks, the median number of offers sellers received were three to four offers. Although you only need one, it’s nice to have choices. This competition can drive up the price and your profit.
Are Buyers Waiving Inspections?
Yes, for some properties and some buyers, they are waiving their home inspection. As a seller, this can alleviate additional appointments and more negotiations however don’t decline a good offer if the buyer includes a home inspection contingency. Sellers should welcome a buyer to do an inspection. If sellers are worried about what a home inspection could reveal, I’d suggest hiring a home inspector before listing and then you’ll have the time to take care of repair issues that could hold up a sale.
Will I Get A Cash Offer?
In Thurston County, I wouldn’t bet on it. Last month, only 14 percent of the sales were cash transactions; the rest were financed.
At the end of the day, all transactions whether they are cash or financed, end up being cash to you, sellers, so you don’t need to hold out for that cash buyer.
What’s Next?
Every month seems to bring new trends in the housing market. In January 2021, a light switch was flipped on and suddenly, offers from buyers were getting far more aggressive than they were in the previous six months.
Then I noticed as the year progressed, buyers were finding the cash to include huge appraisal gaps. (For more on bridging the appraisal gap, see my post on how to win the bidding war: https://www.intunerealestate.com/how-to-win-the-bidding-war-in-2021/ )
Then I saw more buyers waiving their home inspections.
Now I’m seeing buyers start to waive their financing contingency.
Where will this go next? I think the pace and frenzy will slow slightly however this won’t be enough of a break for buyers. Buyers will still need to submit competitive offers but may only be competing with five other buyers instead of fifteen.
If buying or selling your home is in your future, contact me today!