September 2022 Olympia WA Real Estate Market Update

The real estate market is continuing to keep us on our toes.

Earlier this year, buyer demand for homes was extremely high and supply was extremely low. Now demand and supply are both down. Typically, when demand for homes goes down, home prices follow but that’s not happening because supply is still low. Home prices are not coming down as much as home buyers would like and the Olympia market is still very much in a seller’s market.

Buyer Demand

Buyers have certainly hit the pause button due to rising interest rates. By the end of September, the national average for a 30-year fixed loan was 6.7% according to FreddieMac.com/pmms.

After starting the year with record-high sales through May, June through September all saw double-digit decreases in sales.

Supply

What is interesting about the current market is not only has buyer demand tapered off, so has supply. This is due in part because we are entering the winter and holiday season. If sellers have the choice, many sellers will wait until early next year to list their homes instead of trying to list between now and the end of the year.

This decrease in supply along with the decrease in buyer demand has not created a balanced market but instead, has the market still in a seller’s market however it certainly is a different seller’s market. There are just not enough homes to meet the current buyer demand even though this September had 37% fewer new listings than last year.

Home Prices

Home prices are higher than they were last year and for September, they are up over 13% to $492,591.

In late 2021 and the beginning of this year, prices were escalating 20% year over year, so we are currently down from this peak but we are currently more than double historic gains of 6% annual gains. Home sellers are still doing great with equity gains.

What This Market Means for Current Buyers

For buyers, there are the mistakes or rather maybe I should say misperceptions about the market that are causing some issues.

First, it is not a buyer’s market.

It’s true that buyers are facing less competition than in the spring. But buyers will still need to sharpen their pencils as inventory levels are dipping, which can increase competition. For September, the average number of offers for my firm’s contracts was 1.4 offers for one listing.

Finance Types: I was expecting to see more cash buyers with the higher interest rates but the percentage of cash buyers is similar to past months. For September, 16% of the sales were cash buyers and the rest were financed.

Days on Market: Homes that are priced right, meaning the seller did not do a price reduction, are getting offers on average in 10 days and they are on average over the list price. For listings that are overpriced and ignored by buyers, those homes on are staying on the market for about 42 days, which isn’t horribly long when you look back at history and homes were on the market for months.

The rapid rise of interest rates put some buyers on the sidelines but for other buyers, this can be an opportunity. To know if this is an opportunity for you, I highly, highly recommend working with a local, reputable lender. Contact me and I’ll give you my preferred lenders. Your local lender will understand our market and can better advise you about the long and the short term impact of rates, and can go over different loan programs and options that could work for you.

Your preapproval will also need to be updated more frequently with the rapidly moving rates to make sure you are still qualified and the monthly payment is still workable for you.

If you are looking at your cash and investments, be sure to talk with your CPA to understand any penalty or tax implications before selling an investment to buy real estate.

Should you buy a house now or should you wait? It is very difficult to time the market. Nearly all buyers and sellers time their transactions based on life events – not market events. Real estate is the long game. You’ll endure the rise and fall of markets throughout your time as a homeowner but over the long term, history has shown you’ll come out ahead.

What This Market Means for Current Sellers

For sellers, the focus needs to be pricing your home correctly for what the market is today, not what it was.

This market is still very good for sellers especially now as we head into the fall and winter months when inventory seasonally declines. This is good as you’ll have less seller competition and hopefully more buyer competition. As buyers are hesitant to jump into the market with the uncertainty of interest rates, sellers need to capture the buyers who are in the marketplace. And you do that by pricing right.

Even in our low inventory market, buyers are ignoring overpriced homes.

Sellers should also strongly consider that buyers are not going to have liquid funds to do updates. Move-in ready homes now more than ever are in high demand. Clean, repair and update your home prior to listing to attract as many buyers as possible.

Sellers are achieving outstanding gains right now. For sellers who have been in their homes for less than two years, on average, are gaining almost $71,000 in equity.

In conclusion: The market is forging through an economy that needs to heal from its unhealthy past two years. It may take a little time but, as history has shown, I think buyers and sellers will come out the other side just fine. Real estate is a great hedge against inflation and homeowners have achieved excellent long-term equity gains.

If you are considering making a move, contact me today.

Unless otherwise noted, statistics compiled by Coldwell Banker Evergreen Olympic Realty and/or Francine Viola 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.