There has been much talk lately about the overall housing market. Mainly it is centering around when to buy, property values, and if we’re getting set for an additional bubble burst. These conversations seem to be occurring on the mainland all the way to Hawaii. I do not want to say the talk has been centered around doom and gloom, but it seems to have a mainly negative connotation. This is actually proving to be FALSE and not at all reflected in the Hawaii housing reports.
Slow Market in Winter?
As the weather changes on the mainland, so does the overall housing market. The holidays mixed with cooler weather definitely puts the breaks on mainland activity. This is not as prevalent in Hawaii. Yes, the market can slow a bit in Hawaii around the holidays, but this is also the time that buyers flock to our warm weather and beaches to escape the cold of the mainland. This is certainly a great time for travelers to ponder the question, can I live in Hawaii full time?
Housing Supply in Demand
Hawaii absolutely sees much higher home prices compared to the rest of the US. With a more limited number of buildable locations, this would be a natural occurrence. Having some of the most beautiful sites and weather in the world certainly does not hurt either. We did see some record-breaking price movements over the summer months. This is due, in, part to the increased buying from our military members. The summer is prime time for PCS buying and selling for the military in order to get their families set prior to the new school year. What we had been seeing is a rise in price after each closed sale to a new record high amount. This is not great for an already expensive housing market.
What about a Bubble Burst?
Currently, we are seeing not a bubble bursting on the horizon but actually a stabilization of the market. Instead of reaching for a new high sale number after each sale, the market is pricing accordingly. This, in my opinion, is much better than reaching and raising after each closed sale. The Hawaii real estate market has hysterically been very robust. Buying Hawaii property and holding it over time certainly has created a lot of wealth for the property owners. Again, there is no reason that the buy and hold model of property appreciation for Hawaii should or will change anytime soon.
October 2018 Update
The month of October 2018 had a few less single-family closed sales. According to the Honolulu Board of Realtors, single-family closed sales went from 355 in 2017 to 309 in 2018, posting a negative 13% drop. However, the median price actually rose from $752,000 to $800,000 or an increase of 6.4%. Condo sales went from 489 closed to 443 in October down 9.4%, and the prices actually dropped a modest 1.9%. This was a very small shift. The overall days on market for single-family recorded at 29 and 25 for condominiums.
The interest rates continue to see some volatility. However, the rates are holding strong and are lower today than most had anticipated. We are still seeing historically low interest rates. The likelihood of rates dropping is not very realistic. They might bounce around a little, but certainly they will rise over time. If buyers are waiting for the Hawaii housing prices to lower you have to remember that interest rates more than likely will be rising. Even if the prices come down a tad but the rates rise, you have to analyze the impact over a traditional 30-year mortgage term. You end up paying more interest over the life of the loan.
Hawaii Real Estate Market is Strong
The short answer is the Hawaii market is and will continue to be strong. We traditionally fair better than the mainland markets. If you are sitting on the fence waiting, the best advice is to get off the fence and buy. The interest rates are low and the housing market is very stable. As we cycle back around towards another peak summer buying season, two things are sure to happen. One, the prices will increase from where they are today and two, the interest rates on loans will also increase over time. There is no better time to buy then the present.
If you have an interest in discussing the market or want to talk with one of my trusted lenders, please let me know. The best course of action is to be well educated in order to make the best possible home buying decision.