Wondering how the current October 2020 real estate market update for Olympia, Washington affects you? Click here to see the video (and see my partially decorated Christmas tree!).
Buyers and sellers right now have questions and I have some options and answers for you. Here are the common questions I’m getting from my buyers and sellers. Let me know what questions you have.
Home Buyers
Many of you are concerned you are paying too much for a home. Home prices have gone up and are worried you might be buying at the top of the market. You may also have been in multiple offer situations and can’t seem to be the winning offer.
Home Sellers
You may be wondering when this hot sellers market will cool off and when should you sell your home?
I’ll answer these questions but first here are the THREE HEADLINES you need to know about the Olympia, Washington real estate market because knowing just these three things will help you navigate the market.
Headline #1 – Low Standing Inventory
Last month, in all of Thurston County, we had just 217 listings. A seller’s market here is under 1,200 listings, and we are at a measly 217 listings! This low inventory is driving up prices so this is why it’s important to keep an eye on the inventory level.
Headline #2 – Increasing Home Prices
The trailing median sales price in Thurston County for October 2020 was $372,939. This is an increase of 11.1% from last October. This is a steeper price increase than our history typically renders. Typically, homeowners in the Olympia area see an average six percent annual gain.
Headline #3 – Low Interest Rates
For home buyers, this is great news because these lower interest rates are wiping out the increase in home prices. Since January this year, the average 30-year mortgage interest rate dropped a full percentage, yet our home prices increased on average $30,000.
In looking at the average home prices in January and October 2020 and the average interest rate for both of those months, it is actually cheaper to buy a home now.
Although the average home price went up by $30,000 between January and October, the low interest rates wiped out that gain for buyers, and buyers are actually saving a little money by buying now even at a higher sales price.
*Interest rates from http://www.freddiemac.com/pmms/ . The current average fees and points for October is 0.7 for a 30-year fixed rate mortgage. P&I is principal and interest. Most borrowers would have a higher monthly payment with taxes and insurance added to their P&I payment.
Olympia WA buyers – what does this market mean for you?
This low inventory is creating a lot of multiple offer situations with a lot of buyers competing for the same property. How do you win? Know what the seller wants. As your agent, I’ll find that out but in general, most sellers have three worries about a transaction and they are:
- Can you close and buy the home?
- Inspection issues
- Appraisal problems
If you as the buyer can address these issues for the seller, you’ll improve your odds of getting the house. Here are some ideas:
Can you close and buy the home?
Give sellers some relief with this question by already being preapproved by a local, reputable lender. I have some excellent resources for you so ask and I can send you several lenders. By doing this, you are giving yourself a leg up on the competition. Thurston County is a small county and community. The listing agents here know who are the good lenders and know what lenders to avoid. This is where I can help you as your buyer’s agent.
Inspection issues
Most sellers do not like the inspection process. For buyers, to make your offer enticing to a seller, you may choose to waive your home inspection contingency. This is NOT a practice I recommend but for SOME buyers and for SOME properties, this works. Even in this hot seller’s market, I still recommend keeping your home inspection contingency in place, but to improve your offer, shorten the timeframe for your home inspection so at least the seller can get through this contingency period faster.
Appraisal problems
With buyers bidding up properties and offering over the asking price, sellers want assurances that the buyer can go through with the transaction even if the appraisal comes back below the offer price. If you can bridge the gap with cash if the appraisal comes in below the offer price, most times, you’ll win the bidding war.
(If the home does not appraise for the agreed-upon price, the buyer cannot get financing. If the buyer cannot cover the difference in cash, then the transaction may terminate. Buyers cannot count on sellers to renegotiate the price in this market. For more details on the home-buying process, check out my ultimate Buyer’s Guide.)
“Am I paying too much for this house? Should I wait for home prices to go down?”
This is a very valid concern that I hear from my buyers. Home prices are the highest they have been but what do you think home prices will do ten years from now? Do you think home prices would be higher then? What about in five years? What about in one year? My answer is I think home prices will continue to increase. The market is not indicating a future shift where home prices will soften or go down.
Olympia, WA Sellers – how long can this hot market last?
Sellers, you may be wondering how long can this hot market last? Is it going to all come crashing down? I think this hot seller’s market is going to last a while. Here’s why:
- In our market, things that would indicate a shift in the market would be if we had a lot of listings. To get to a balanced market in Thurston County, we would need about 1,500 listings every month. We have 217 listings right now so it would take A LOT for the market to soften.
- The stock market has done well. It has reacted positively after the presidential election and the announcement of a COVID-19 vaccine.
- Interest rates are predicted to stay low. In fact, the Federal Reserve’s latest economic forecasts suggest that interest rates will remain low for the foreseeable future, and some interpret that to mean through 2024.
- COVID-19 has actually sparked more people wanting to move mainly because they have virtual work opportunities.
All of these things have made for a strong real estate market.
Timing the real estate market is nearly impossible. People buy and sell homes based on major life events like career changes, family changes, people are upsizing or downsizing. The good news is sellers will have quite some time to reap all the benefits this market has to offer. Sell when it makes sense for you.
Conclusion
As a former real estate appraiser turned Realtor, I’ve been through several market shifts. Unless our market sees a huge influx of listings, I predict home prices will go up, buyer competition will remain steady and the real estate market will continue to be a steady, positive influence on the overall economy.
Call me today if you are thinking of making a move. I work exclusively with buyers and sellers in the Olympia, Washington real estate market.
Keep up on all the market activity by subscribing to my YouTube channel where I post videos once a week about buying and selling homes in Olympia.