By Logan Freitas
As a Real Estate Professional, the question I get asked most often is “When is a good time to buy?” The answer is simple but also intimidating: “when you can afford it.”
For local families, affordability in Hawaiʻi is quite the oxymoron. But my mission is not to complain about what could be, my mission is to find a way. With recession talk on the rise, “timing the market” is ringing once again. The cost to own in Hawaiʻi is high, but is the cost of waiting higher? Let’s discuss.
Did anyone else think the real estate market would crash at the start of the pandemic? Me and my colleagues sure did! This was a strong hypothesis – loss of jobs, stimulus checks, rising costs of goods, etc. All valid reasons for buyers to wait.
Then, against my prediction, the 2021 market took off like a rocket, with approximately 60% of homes selling for over the asking price – some hundreds of thousands of dollars over. While that was frustrating for buyers, the silver lining was that interest rates were historically low. Once again, many buyers decided to wait in hopes the prices would come down. Fast forward to the present day, and those people were right – there has been a cooling of the market and prices are coming down. Problem is, with interest rates going up, the cost of waiting continues to pile up.
According to historical data provided by the Honolulu Board of Realtors, since 1985 there have been two years in which Hawaiʻi median sales price decreased by more than 5%. In that period, there have been nine such years where the median sales price increased by over 10% (2021 increased by a whopping 19.3%).
Let’s not sugarcoat it – the current market is rough!
High interest rates are really affecting purchasing power. Inventory is still low as potential sellers are holding off from listing. So, is there any good news? Always.
Fewer buyers mean fewer bidding wars. The chance of getting good homes at asking price, or even a little below, is a real possibility that we haven’t seen in a few years. Creativity can win the day – work with a professional team who will get creative with things like financing strategy and “rate buy-downs.”
I truly believe there is a time for everyone to succeed in this market. Will prices come down? Maybe. Will rates go up? Maybe. We cannot control what will happen – only the market can do that. And the market waits for no one.
Logan Freitas is a Realtor with Century 21 iProperties Hawaii. He is state certified and specializes in buying, selling and development. His passion is to help locals afford Hawaiʻi. Contact him at firstname.lastname@example.org, 808.284.5585 or IG: @keepinghawaiihome.