The median price of a Thurston County home set a new high in March, rising to $500,000, according to Northwest Multiple Listing Service data released this month.
That was up 18 percent from the same month last year, and it's another sign that low inventory, combined with steady demand, continues to drive prices higher.
But for how much longer as economic headwinds grow stronger? Gas prices, inflation and mortgage interest rates are all higher, too.
Bloomberg News reported this week that the average mortgage rate for a 30-year loan reached 5 percent for the first time in more than a decade, up from 4.72 percent last week. The last time rates hit 5 percent was in February 2011.
Five percent is still a historically low rate, but it's clearly up from when rates were closer to 3 percent.
"For homebuyers under age 35, a 5 percent rate is uncharted territory," said Greg McBride, chief financial analyst at Bankrate.com, to Bloomberg News. "The speed at which rates are going up will cool the housing market by reducing demand. But that may only mean housing goes from sizzling to warm. Demand still exceeds what is a record-low level of supply."
Steve Garrett, owner and designated broker at Windermere Olympia, said he hasn't seen any signs yet that higher mortgage rates have impacted the market here. However, he thinks prices cannot sustain double-digit increases.
"Prices will finally start to cool off," he said. "That's the direction we're going."
Still, the current state of the market continues to strongly favor sellers over buyers, he said. He recalled a home at Indian Summer Golf & Country Club that was listed for around $800,000. It still received multiple offers and finally sold to someone who paid cash.
The majority of homes are still sold via traditional mortgage financing, but the number of cash transactions has risen dramatically over the past three years, Garrett said.
How is that possible? It's possible because the median price of a home can be much higher elsewhere, such as in King County where it rose to $930,000 in March. Sell your home there and a median price of $500,000 seems almost reasonable.
The downside to this market is that it has been very hard on the buyer, particularly the first-time home buyer who is forced to come up with tens of thousands of dollars to make a down payment on a $500,000 home.
"It's next to impossible," Garrett said. "The first-time buyer has literally been left at the starting blocks."
Economic pressures might begin to push the market in the direction of buyers, but that change has a ways to go. Months of inventory here is still below one month. A market that doesn't favor either buyer or seller is thought to have inventory in the range of four to six months.
"When you consider at one time a normal market inventory was 4-to-6 months, we now consider that measure a relic of times gone by," said Dick Beeson, managing broker at Re/Max Northwest Brokers. "We will not see such numbers of homes for sale for possibly a generation or more."
A closer look at the numbers for March
▪ Single-family home sales rose 19.6 percent to 433 units in March 2022 from 362 units in March 2021.
▪ Single-family median price rose 18.8 percent to $505,000 from $425,000 over the same period.
▪ Single-family pending sales fell 8.6 percent to 496 units from 543 units over the same period.
▪ Condo sales rose to 12 units from nine units over the same period.
▪ Condo median price rose to $285,000 from $199,900 over the same period.
▪ Condo pending sales fell to 11 units from 15 units.
Source: Northwest MLS.