What is happening in the real estate market?
The first half of 2022 in the Thurston County real estate market broke impressive records but the question on everyone’s mind is what is in store for the second half of the year? As inflation and rising interest rates are at the top of buyers’ minds, sellers are worried that they have “missed their window” to sell.
I think this graphic that we used last year is very appropriate to describe how buyers and sellers are feeling today. It is still a hot market but just not searing hot, and this slight change is what buyers and sellers are feeling.
Quick Stats on the Olympia, WA Real Estate Market for May 2022
- Median Sales Price: $481,272
- # of May Home Sales: 463 – 4th best May ever
- Absorption Rate: 0.77 months supply of homes for sale
- # of May Homes Actively for Sale: 358 listings
Thurston County’s Median Sales Price
May’s median home prices are up 19.2% from last year. For the last seven months, the year-over-year gains have been over 20% but buyers and sellers are perceptive and are feeling this 1% change. Sellers this year are in a very unique and unprecedented period of time with these truly impressive and historic gains. No other time in history have sellers gained this much equity in such a short period of time.
You can see the impact the low inventory has on sales prices: prices have skyrocketed at a steep pace:
Thurston County’s Number of Home Sales
May 2022 was the fourth-best May on record for the number of home sales in Thurston County. With an increase in listings, there are buyers ready and waiting to buy.
Thurston County’s Supply / Absorption Rate
Although the standing inventory is trending up at this time, it isn’t anywhere near enough to bring a significant shift to the market. New listings to the market in May are up 4.8% from last May.
The record seller’s market continues with just a 0.77-month supply of homes (or 23 days). A balanced market is 4-6 months of supply. Thurston County has been in a seller’s market for 7.5 years and as a result, home prices have increased.
What Buyers are Experiencing in this Market
Buyers who have been in the market for a few months are definitely seeing a difference in the competition. May has offered some relief as more listings have come to the market.
- The average number of offers per listing in May was 2.1 offers compared to 2.7 and 4.6 offers the preceding two months.
- 66% of May’s homes sold over the asking price. Last month, 68% of April’s homes sold over the asking price.
- Of the homes that sold over the asking price, the percentage has gone down from 7% in April to 6% in May. Earlier this year, homes that sold over the asking price were 11% over the list price.
Although these percentages may seem small, it is palpable. In fact, many of my buyers who encounter a listing that has been on the market for longer than 6 days or has no other offers start to wonder what is wrong with the property! I think buyers should rejoice when they encounter a home without other buyer competition! But it takes a shift in perspective as buyers have been through fierce bidding wars.
Part of this lessening of competition is the natural, typical, seasonal influx of listings. A higher number of listings eases competition, eases prices increases, and the number of showings per listing decreases….slightly…. compared to the first half of the year. This seasonal change may not indicate a shift in the market because buyer demand is still higher than the supply of homes available. By the way, Thurston County went from a 2-week supply of listings to a 3-week supply of listings – still a very steep seller’s market.
What Sellers are Experiencing in this Market
Sellers are still achieving record equity gains – there is no doubt about that but what sellers are seeing are fewer showings and fewer offers. Sellers’ expectations for receiving 20 offers in the first few days of being listed are no longer realistic. This is due in part because of the seasonal influx of more listings hitting the market.
Sellers may find themselves negotiating repairs with buyers. This is something that temporarily was a rarity but buyers are having home inspections and few buyers are waiving their inspection contingencies.
Sellers also need to brace themselves for being on the market a little bit longer than maybe what they were expecting – instead of a few days, it might be a week or two.
Predictions for the second half of 2022
Interest rates are predicted to go up as the year continues but …. rates have inched down a little bit this past month from the high of 5.3% in May to currently 5.09% for a 30-year fixed-rate loan with an average 0.8 in fees/points (from FreddicMac.com/pmms).
Inflation isn’t going away overnight. Due to inflation, COVID-19 reasons, and supply-chain issues, it seems like just about everything is more expensive. There will be a point when consumers will stop spending. This will have an impact on the real estate market but the bigger influence will be employment. The good news is unemployment rates are exceptionally low.
My predictions for the rest of the year is the market will remain very much a seller’s market but buyers who have been looking for homes for a while will see relief and may even feel like it is a buyer’s market compared to what they have been through….but the market is a long way away from shifting to a buyer’s market with 4-6 months of supply of homes compared to our current 3-weeks supply.
If you are interested in keeping up with the market, be sure to subscribe to my YouTube channel where you’ll find my monthly updates plus videos about buying and selling in the Olympia market.
VIDEO: June 2022 Olympia WA Real Estate Update
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.