For the September 2021 Olympia, Washington real estate market update, I thought I’d address some of the bad, misleading headlines out there and get to the truth.
Headline #1: The Housing Market Shows Early Signs of Cooling Down
The writer of this headline is analyzing the uptick in inventory and concluding that the market is cooling off. Although we do have more listings on the market, it doesn’t mean the market is cooling off.
July was the first month to reach over 300 listings (and this is also seasonally driven). The last time the Thurston County real estate market had over 300 listings was July 2020.
In order for the market to “cool off,” we’d need to add 2,500 listings in one month and every month thereafter. I just don’t see this happening.
With more listings, the market achieved more sales
July, August, and September have been the highest months on record EVER for the highest number of sales.
The market is still deep into a seller’s market
Absorption rate measures supply and demand. With just over two weeks of supply (meaning it would take buyers two weeks to buy all the homes for sale in Thurston County), we are still very much deep into a seller’s market.
Headline #2 – The Seller’s Market is Over
This headline is a little dramatic and I don’t see the seller’s market being over. But the author goes on to write, “a decline in over-asking contract prices and fewer bidding wars are among the recent shifts.” This I can agree on but I don’t agree with the author’s conclusion that the seller’s market is over.
In just looking at my firm’s data, April this year was the peak number of listings with multiple offers with 69% of our contracts had multiple offers and 96% of the contracts were at or above the list price. For September, we saw lower numbers with 41% of contracts with multiple offers and 78% at or above the list price. But this change does not mean sellers have missed their window of opportunity.
Some sellers are overreaching on price so instead of having the price bid up, the sellers have already bid up the price and yet sellers are still achieving impressive returns.
The equity sellers have gained is impressive. Sellers on average gained 20% from last year. Our historic gains are 5-6%. The median home price is now $435,506. With inventory still low and buyers outnumbering sellers 2 to 1, this continues to drive up home prices and most sellers are achieving six-figure gains.
Headline #3 – Home Prices Cooling – Market is Starting to Shift
For this particular article, the writer compared July sales to September sales in our neighboring county. I bring this up because you’ll see articles like this that are taking seasonally higher summer numbers and compare that to a seasonally lower sales month.
In our market and probably for many markets in the country, we have a lot of high-end and million-dollar waterfront properties that typically only are listed and sold in the summer, therefore our average sales prices tend to be higher in the summer months than any other time of the year. However here in Thurston County, September still exceeded July’s numbers.
When only monthly numbers are quoted for price, we see big fluctuations because the data set is small. A better and more accurate comparison is to look at the trailing twelve months. This is a larger data set and includes all four seasons, which removes the fluctuations that happen with high-end sales. (However, our trailing 12-month median sales price for September still exceeded July.)
Headline #4 – A Supply Shock is About to Hit the Housing Market – Foreclosures Coming
This headline is in reference to the mortgage forbearance program that expired for many borrowers in September. This program allowed borrowers up to 18 months of forbearance and September marks the 18th month. But our robust real estate market has helped give most struggling homeowners the ability to easily sell, avoid foreclosure, and even pocket some profit.
Back in the mid-2000s, Thurston County’s foreclosure filings were 30 to 35 filings per week. By contrast this year, there are about 3 filings per week. Because most sellers are able to sell for a profit now, I don’t see a slew of foreclosures coming to the market anytime soon.
Headline #5 – Mortgage Demand Falls as Rates Rise to Highest Level Since July
In July, the average interest rate was 3.03% and in September is rose to 3.10%, according to national mortgage rates from http://www.freddiemac.com/pmms/. (These average commitment rates have average fees and points of 0.7% for a 30-year fixed-rate mortgage.)
For a $500,000 mortgage, this is a difference of only $19 per month. I’m not sure this huge surge in an interest rate between July and September warranted the writer to continue with “higher interest rates took some recent wind out of the sails in the mortgage market.”
The fluctuations in mortgage interest rates are not slowing buyers down. In fact, Thurston County’s pending activity broke a record in September with 657 buyers going under contract.
The next time you read a sensational headline about the real estate market, make sure you read the whole article as the boring truth is probably buried in there! Or call me and let’s talk about the market and how it affects you whether you are a buyer or a seller in the Olympia area.
VIDEO: Let’s Play the: “What Kind of Headline is That?!” Game
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.
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