Hawaiiâ€™s housing market may begin to see increasing numbers of sales in the coming months according to some prominent economists and professionals in both the real estate and construction industries.
Harvey Shapiro, Research Economist at the Honolulu Board of REALTORSÂ®, noted that Oâ€˜ahuâ€™s relatively low inventory is keeping prices more stable than in other areas of the U.S. Honolulu’sÂ relatively low foreclosure rate may also be a factor in the market’s stability, as Honolulu ranked 150th among the top 203 metropolitan areas in the U.S. for foreclosure filings for the first quarter of 2009.
Historically, the Hawaii real estate market has been strongly influenced by market trends in California, where home sales doubled in January of 2009 compared with the previous year, and exceeded 600,000 for the first time since 2005.
David Crowe, the chief economist for the National Association of Home Builders, recently said that the middle of 2009 may be the bottom of the housing market, and he predicted an upswing in home construction during the latter half of 2009.
The Wall Street Journal also recently reported that the number of homes listed for sale plummeted across most major US markets at the beginning of 2009, while the number of homes sales was beginning to rise.
Another factor jump starting the housing market is the new tax credit that allows first-time buyers to claim an $8,000 credit or 10% of the home’s valueâ€”whichever is lessâ€”on their 2008 or 2009 taxes.
Other recent aggressive actions by the federal government include the purchase of hundreds of billions of dollars worth of Fannie Mae and Freddie Mac debt, and this is having a positive effect on national levels of consumer confidence and consumer spending which rose again last month along with significant gains in the stock market.â€¨ The Consumer Confidence Index rose significantly in April after a slight rise in March, and is now at its highest levels of 2009, providing another signal that the economy is nearing a bottom.
Consumer spending also increased recently, its biggest rise in two years, and since consumer spending accounts for about 70% of the economy it is closely watched as a gauge of the economyâ€™s health.â€¨ Analysts have attributed this rise in spending to tax cuts and smaller mortgage bills due to refinancing. Consumer spending is expected to continue to improve due to tax rebate checks.Â All of these factors bode well for the housing market as well as for the potential easing of credit markets which will allow real estate buyers access to loans.
Also fueling a new optimism are historically low interest rates with loans under 5% currently available. Many people who have been waiting in the wings in Hawaiiâ€™s real estate market may soon decide that now is the best time to buy, especially since median prices in some areas have dropped so significantly, and any potential future price reductions could easily be offset by a rise in interest rates.
Matt Beall (R), Principal Broker here at Hawaii Life Real Estate Service, also sees a new energy among buyers.
â€œIn recent weeks weâ€™ve seen a sharp rise in the number of inquiries, and these are beginning to translate into transactions.Â With the interest rates where they are, and so much inventory to choose from, buyers are beginning to realize that this is an extraordinary time in our market. I think buyers are seeing investment properties pencil out with positive cash flows, and tenants are starting to realize that buying makes a lot more sense than renting right now.â€
With so many prospective buyers waiting on the sidelines, the best deals may go fast. This will put further upward pressure on prices and help to reinvigorate Hawaiiâ€™s real estate market.
Stock market gains in the last two months have also helped reassure buyers still reeling from the housing, credit, and financial crises. Gains in the S&P for April were led by the Retail (up 15%) and Financial (up 17%) sectors.
Brian Bethune, an economist at IHS Global Insight, recently stated that â€œThe most severe phase of the recession is behindÂ us.â€ If that is true, then the current low interest rates coupled with low prices provide good buying opportunities here in Hawaii.