Most people would believe that the winter real estate market in Olympia, WA would be slowing down. And every winter, I am amazed that it just seems to ramp up! November was no exception and in fact, this November broke all of last November’s records.
In short:
- Median Sales Price: $451,238 – Up 20.3% from last November
- Closed Homes Sales: 540 – Up 15.1% from last November
- New Listings: 359 – Up 11.8% from last November
Median Sales Price
In the Olympia market, by using the 12-month trailing median sales price, it provides more data and takes out seasonal influences. This November, our median sales price was up 20.3% from last November to $451,238.
For buyers, these home prices can seem very hard to accept. But with the low interest rates, the difference between a home priced at $450,000 versus $500,000 is less than $200 per month with an average interest rate.
For sellers, this past year has yielded exceptional gains for you. This pace isn’t sustainable and although we still anticipate homes prices to continue to climb, it just may not be at this current pace of 20% or more.
Home Values
Historically, the average annual price appreciation has been about six percent. Homeownership has paid off for nearly all years since the MLS records from 1986.
Why Are Home Prices Going Up?
The lack of supply and the high demand is one of the largest driving forces of why home prices are continuing to go up.
How this demand is measured is by calculating the months of supply of homes. By dividing the active inventory (for November, this was 193) by the number of homes sold (540 November sales), this number equals the number of months needed to sell out the existing inventory.
Today, to sell all the homes currently for sale in Thurston County, it would take 0.36 months or just 11 days. This signals an extremely strong seller’s market.
(Any number below 4 months of supply is considered a seller’s market.)
Prices move differently depending upon the type of market. You can see from the chart below how the months of supply impacts pricing. Fewer homes mean high sales prices.
Supply – Where are all the New Listings?
In 2006 and 2007, Thurston County had an oversupply of homes available and mostly that was due to a lot of new construction. Since then, Olympia has been in a new construction deficit and the market is mostly relying on resales to come to the market instead of depending upon new construction plats to make up the shortfall.
This shows how the number of new residential building permits has fallen since the height in 2005.
While this November was the 4th best November for new listings coming to the market (359 new listings), it still is not enough to meet the high buyer demand.
Demand – Why is There so Much Demand for Homes in Olympia?
Buyers are moving to the area because of the typical reasons of significant life changes in career, family size, and/or financial status. But this year has brought many other buyers to the area including the virtual worker who can live anywhere in the country.
Most of my buyers this year have been out-of-state buyers who are exactly in this situation: they do not need to live close to their jobs, which may be in a busy, expensive, congested area. With this freedom, these buyers are choosing a better quality of life yet still can keep their good-paying jobs.
Another interesting observation in my practice is how many buyers are moving due to political reasons. They feel like their current home does not fit their political views and need to find an area that suits them. This comes up frequently with out-of-area buyers who ask me about the political climate in Olympia.
Olympia is the most affordable county along the I-5 corridor. Buyers are skipping Seattle and are looking for more breathing room, less traffic, and of course, more affordable housing options.
Olympia is very well-positioned to get to a lot of outdoor activities. In two hours in any direction, you can get to the Pacific Ocean, the mountains, the rain forest, and go a little further east to get to the drier eastern Washington.
Seattle is about 2-3 hours away (depending upon traffic). Portland is less than 2 hours away, and you can enjoy no sales tax on your shopping trip!
What Would It Take to get to a Balanced Market?
To express how deep of a seller’s market the Olympia market is in, this chart shows the average numbers during past balanced and buyer’s markets as compared to our current market.
As you can see, it would take a huge shift in buyer and seller activity to get to even a balanced market.
The market would need to cut in half the number of sales AND increase the number of listings ten times in order to get to a balanced market. I don’t see either of those scenarios happening any time soon let alone both demand decreasing and supply increasing.
When we see headlines talking about the market is crashing or how the market is cooling off, it really, truly is not. Huge shifts would need to happen for the market to “crash.”
Number of Buyers for Every Seller: Comparing July to December
As I started this post, many believe the winter months to be slower months. The winter months here in Olympia with the low inventory yet busy buyers have created a very lucrative December for sellers.
So far for the first two weeks of December, there have been three buyers for every one seller.
For buyers, the competition remains high, and even more so in the winter. But I expect some relief in January when I predict many more listings will come on the market. If a seller is considering selling, most will wait until after the holidays to list.
For sellers, pricing right is still important because buyers are very well-versed in the market and what they see as value. Keep in mind, buyers are scouring the listings every day. They are market experts and will ignore overpriced listings.
Even in this market, there are listings that have not sold because they are overpriced and have been ignored by buyers.
As of today, there are 144 single-family homes available for sale and 105 of these homes have been active on the market for 7+ days. (These homes are in all price ranges, not just the higher-end properties.) Buyers – you may have an opportunity to negotiate on some of these overpriced properties. Sellers – price right and your home will sell.
Stay tuned for my market predictions for 2022. In the meantime, if you are thinking about making a move, contact me today. We’ll discuss the best path for a successful outcome whether you are buying or selling or both.
VIDEO: November 2021 Olympia WA Real Estate Market Update for Buyers and Sellers
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 are based on our own proprietary market study. Information and statistics derived from NWMLS.