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Now or Later – Timing the Real Estate Market

Pictured home: 15-1835 1ST Avenue, Keaau

The concept of “timing the market” has implications for first-time home buyers, home sellers, and veteran real estate investors alike. The idea that the market will adjust significantly downward allowing sellers to sell high today and buy low later, or the notion that a home buyer should delay their purchase in hopes prices will recede requires a bit of almost impossible in-depth analysis. Such analysis must be done within the context of our local marketplace to be complete.

Talking Bubbles

Not a day passes that I don’t hear “bubble talk.” If there is a bubble (and many still believe there is not), it will likely take several years before we are able to truly confirm it exists.

Rising Rates

Many anticipate interest rates will soon rise. This means that delaying a purchase could actually cost more even if prices decline. Here’s why. A payment of $1,789 will purchase a home of approximately $300,000 in today’s market. If interest rates rise only 2%, buying power is reduced over $50,000 to $245,500.

A delay normally means paying someone else’s mortgage payment (renting) for an indefinite amount of time. Knowing when the bottom has been reached will be difficult to assess. A seller’s profit might quickly lag behind rent payments as they sit and try to determine when the market has hit its peak.

Off-Island Buyers

Keep in mind that many high-end buyers, those who typically buy in Hawai`i, are not normally impacted by market fluctuations. This group of buyers, comprised largely of relocating buyers with tons of equity in their current home and even a tidy retirement portfolio, account for much of our current activity. This factor alone could likely insulate Hawai`i from the normal effects of any national housing bubble. Their search for a home outside the city, second or retirement homes will be timed by a clock (such as years to retirement) other than local housing conditions. Those about to enter the market should not feel left behind.

Local Buyers

Being a local purchaser has distinct advantages over mainland buyers. Local buyers have the luxury of being here. Decisions aren’t quite as rushed. Local folks know the area. When something new pops on the market, it can be viewed immediately. Buyers across the board are feeling constrained by lack of inventory so being able to view and make an immediate purchasing decision is huge.

Get Professional Help

Working with a real estate professional who will help prepare you to compete with mainland buyers is essential. Watching the market go back down isn’t going to be any easier to monitor than watching it rise.

Pro Tips:

  • Visit one of our websites regularly.
  • Contact an agent with a heavy listing portfolio. As I mentioned before, they are in the best position to know what’s coming on the market.
  • Watch for price adjustments or properties returning to the market.
  • Watch interest rates.

Luckily, changes in the real estate market are not as erratic as the stock market so while it’s possible to take a deep breath and watch, trying to time the market is probably not a great strategy for buyers and sellers alike.

About the Author

Denise Nakanishi

Denise Nakanishi is a REALTOR Broker with Hawai'i Life. Denise Nakanishi is one of Hilo's most acclaimed real estate agents. She reached the rank of Major in the US Army and is now known by many as "Major Mom." The nickname fits–not only does Denise bring the discipline and mission-oriented attitude you'd expect, she's also caring and compassionate, always looking out for her clients like they're her own family. Having made the Big Island her home since 1987, Denise combines her extensive knowledge of the area with a sharp focus on customer service and the results speak for themselves. She's the recent recipient of the Best East Hawai`i, Best of Zillow, Chairman's Circle Award, President's Circle, Top Producing Agent since 2001, and Realtor of the Year awards. Denise stays ahead of the curve because she's passionate about education–she served as Education Chair for Hawaii Island REALTORS® for many years. She's one of Big Island's best real estate resources, known for her weekly article in the Hawaii Tribune Herald. Denise leads Team Nakanishi for Hawai`i Life, who is committed to their family, work, and community. In her little time away from work, Denise is a committed runner and Grandy. She also devotes many hours to various Veterans' Organizations, the East Hawaii Cultural Center, and the Hawaii Island REALTORS®. You can email me at denise@hawaiilife.com or via phone at (808) 936-5100.

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Ernesto

June 15, 2021

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Shanna

June 22, 2021

This is a very interesting article. Please, share more
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Denise Nakanishi, R(B)

June 27, 2021

> Thanks for your feedback Shanna! I write a new blog every week on different topics. I hope you find them helpful 🙂

Alanna

July 15, 2021

This is a very interesting article. Please, share more like this!

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