This real estate market update is going to be a little different as we are in unprecedented times, dealing with COVID-19 and its impacts on all of us. It has left many struggling emotionally, physically and financially. For this report, I wanted to share with you the questions I have been receiving from my clients.
Click here to watch a recap of the most common questions I’m getting from sellers about the Olympia WA real estate market.
For some of my clients, they find themselves in a situation where they need to sell and have many questions about how to proceed next. Others are able to hold off and are choosing to wait until the summer when we hope the virus curve has flattened and gone down.
I’d like to start off and say that the market will be just fine if you decide to sell now or if you decide to wait.
Please do not take to heart any media reports that are trying to scare people into selling their homes now before the market “crashes.” This is just nonsense and here are the facts to back this up.
Are housing prices going down due to COVID-19?
In looking at April 2020 numbers so far, home prices are still going up. This is because of our exceptionally LOW SUPPLY of listings and the continued HIGH DEMAND is driving prices up and the market forward. Even if we doubled the number of listings we have available now, we would still be very much in a seller’s market. This alone is pushing prices upward.
We also look very closely at the Absorption Rate, which evaluates the rate at which homes are selling. A balanced market has an absorption rate of 4-6 months; anything under 4 months is considered a seller's market.
For April 2020, we are projecting the month will end at 0.92 months of supply. (This is nearly a record low for Thurston County.)
For 2020, Thurston County’s median home price is $356,500. (Last year, it was $340,000.)
The first months of 2020 saw a minor dip in March but overall, are marching upward.
Is this 2008 2.0?
The 2020 real estate environment is structurally very different from the 2008 market crash.
2008 Problem #1 - Poor buyer loan qualification and unhealthy loan products.
Remember the term subprime loans? Lenders were offering sketchy loan products to people who maybe weren’t the most financially qualified for a mortgage. Borrowers with less than stellar credit and loan products that were created to get “anyone” into house was a huge problem in the mid-2000s. In 2020, the lenders and buyers are more financially sound and healthy.
2008 Problem #2 – Overbuilding and oversupply
In Thurston County, we had a huge uptick in residential building permits, which resulted in a massive overbuild for the buyer demand. The new construction was a huge factor in adding too much supply to our market with not enough buyers, which drove prices down. Right now in 2020, we have the opposite problem which is we don’t have enough new construction (nor enough resale homes, either).
2008 Problem #3 – Foreclosures
During these down years, Thurston County on average would have 35 foreclosure filings per week. In 2020, we have about 1-2 per week. Foreclosures were not only happening to unqualified buyers and homeowners who tapped too much equity from their homes, but also builders were going into foreclosure. (This is why you see some plats with several different builders.)
The loans given to unqualified buyers led to this foreclosure crisis, higher unemployment and poor credit. This led us to a huge oversupply and a diminished demand.
One of the biggest red flags for a declining market is to look at lending standards. If lending standards go down, that is a red flag. For example, in residential lending, the potential red flags are:
- Lenders offering lower down-payment loan products
- Lenders lessening credit score requirements
- Lenders ignoring value and moving to automated appraisals
- Lenders offering risky credit products
If I’m considering selling my home now, how do I do this?
Every seller has a unique situation and I’m here to discuss your options with you.
The Governor’s Office, Washington REALTORS® and the Northwest Multiple Listing Service have provided mandatory protocols for in-person interactions including:
- No more than two people, including the broker, may be at a property at any one time; and
- Those two persons must strictly follow social distancing guidelines.
- No public nor broker open houses are allowed.
- I wear a cloth mask, disposable gloves and shoe covers whenever I tour a home and I ask my buyer-clients to do the same.
- Brokers are to work from home and are to do everything they can remotely to avoid in-person activities.
- Virtual tours and walk-through videos are now more than ever are very important marketing components.
There are many other rules and protocols in place for real estate brokers, home inspectors, appraisers, contractors, escrow offices, etc. and this warrants a much more in-depth conversation for your particular situation. Please know that if you decide to list your home now, we have options available to you to keep you and your family safe.
Protecting your finances during the Coronavirus Pandemic
The Consumer Financial Protection Bureau is a good place to start if you have been financially impacted by COVID-19. Please visit https://www.consumerfinance.gov/coronavirus/ for information on the economic stimulus relief programs available.
As always, please feel free to contact me with any questions you have. And if you have a creative recipe tip for me (as I mentioned in my video), please, please let me know! 😊 Take care of yourself and I look forward to talking with you soon!