Changing to a more balanced real estate market
Mortgage rates have skyrocketed this year, and this is putting tremendous pressure on the real estate market in Thurston County. Inventory is rising, days on the market is increasing, closed sales are falling, and we’re starting to see more price reductions and lower prices. There is still a window of opportunity to sell your home for maximum value, but that window of opportunity is closing.
Let’s take a look at market statistics from last month.
Higher Interest Rates
Interest rates are the biggest factor in the market right now, and are at their highest point since 2008.
Higher interest rates increase the monthly payment and reduce buyer purchasing power.
Months of Supply
Months of supply is a way to measure the available inventory of homes for sale in relation to the current rate of closed sales. Months of supply is the number of homes for sale, divided by the number of closed sales in the past month. For example, if there are 300 homes for sale right now, and 100 closed sales in the past month, then that would be three months of supply (300/100=3).
Three months of supply is what we would see in a balanced real estate market in Thurston County, where neither the buyer or seller have a pricing advantage. When months of supply is greater than three months, that’s a buyer’s market. When months of supply is less than three months, it’s a seller’s market.
Look at the chart below. We are getting closer a balanced market. Since COVID began we have spent a lot of time with less than one month of supply of inventory. Now we have 1.7 months of supply.
Days on the Market
Days on the market tells us how long it takes a property to sell. It is measured from the date of listing until the date that the property changes to a pending status. A balanced real estate market for Thurston County would be an average days on the market of 30-45 days. We’re getting closer to that.
Closed Sales
One way to measure market activity is to look at the number of closed sales. In the chart below, you can see the number of closed sales going back to January 2006. A closed sale is when a buyer and seller complete the purchase and sale transaction and the ownership of the home transfers to the buyer. Closed follow a seasonal pattern. They tend to peak in the summer and decline in the winter.
Median Sale Price
And finally, we get to median sale price. This is different from average sale price, and a lot of people get those confused. The median is the number in the middle of the data set. Half of houses are selling above the median, and half below. We use the median sale price instead of average because the average sale price can be skewed by the mix of high price vs. low price homes sold in a given month, which makes average price too volatile from month to month to be a good indicator. So, in housing we use median price.
The median price peaked in June 2022 at $520,000, and has declined since then. More importantly, the price appreciation trend line (red line below) has been broken, indicating a change in direction for home values.
The window of opportunity is closing
Rising interest rates are putting downward pressure on home values. Prices are still very close to all-time highs. You still have a window of opportunity to sell your home for maximum value, but that window of opportunity is closing.
Take Advantage of This Historic Opportunity
Who knows how long this window of opportunity will stay open? If you’re thinking about selling your home anytime soon, you should act now.
We offer a free consultation and analysis to help you determine whether selling your home is the right move for you. This is more than just a “free market analysis” that any real estate agent can provide. We take a consultative approach, and we see ourselves as trusted advisors, not salespeople. We will go deeper to help you identify and evaluate your options, and bring up things to consider that you might not have thought about already.
Our free consultation and analysis includes:
- Listen to your goals and needs (we listen more than we talk)
- Help you figure out whether selling now is right for you
- Prepare you by setting realistic expectations
- Make suggestions for property improvements, staging, and marketing
- Tell you how much your home is worth and how much cash you’ll get when you sell