There is a lot we don’t know about the future of the real estate market. And, that’s okay. What’s not okay is when you don’t know what you don’t know and fail to acknowledge your own lack of knowledge and limitations. That’s dangerous. Very dangerous.
So, we acknowledge that we don’t know everything there is to know about the future of real estate and that there are some things we don’t know that we don’t know.
Why is recognizing what you don’t know healthy?
Because it’s an honest view of your knowledge and capabilities, as well as your ignorance and limitations. When it comes to predicting the future of Hawaii’s real estate, our knowledge and capabilities are limited. So are everyone else’s.
But, there are some things we do know. Things that are based on current data and a historical perspective.
For example, historically, a balanced market has around 5-7 months’ supply of inventory. Nationally, we’re at just over 2 months’ supply. On Oahu, it’s less than two months. So, to reach a balanced market, we need an increase in supply. A big increase! We also need a large decrease in Buyers. Even with increased interest rates, Buyers are still clamoring for housing. Why?
Homeownership is more than just an economic decision.
Quality of life, security for loved ones, stability, lifestyle choices, and a whole lot more enter into the equation. How do we measure these intangibles that have historically impacted the demand for housing? We can’t. Especially in Hawaii, where land is scarce and demand is high and the allure of living in paradise has only increased post pandemic.
We could never have predicted the unprecedented growth rate during the pandemic and we can’t predict the growth rate going forward. But, we can look at history to glean some indication of where we might be headed. According to data from the National Association of Realtors, even during periods of sustained interest rate increases, we still maintain an average price growth rate of 5% over time. Interesting. So, even if we do see a drop in the number of home sales, over time, we still experience good price growth.
We also know that the median sales price for Oahu has gone up 542% since 1985. That’s right — 542%. That equates to a little over 5% per year. In 1985, Oahu’s average sales price was $205,000 approximately. In 2021, the average sales price was approximately $1,250,000. Wow!
Henry Ford said, “Tell me why I should clutter up my mind with general knowledge… when I have men around me who can supply any knowledge I require.” Henry was a pretty smart guy and what he said makes sense. When it comes to your real estate decisions, there is a lot you don’t know. And, there are some things you don’t know you don’t know. Again, that’s okay. What’s not okay is relying on wrong or insufficient data and listening to the wrong voices.
Take Henry’s advice and ours, too. Surround yourself with people who can provide you with the knowledge that you need to make your real estate decisions. Get data. Lean on wise counsel. Frankly, even if you do listen to the experts, there will still be a lot of unknowns, but at least you will have enough information to make a sound decision.
Hmm…..we don’t know everything and we don’t know everything we don’t know, but we know this: Hawaii real estate is still in demand and living here is still no ka oi (the best).
One more thing: The whole meaning of ‘you don’t know what you don’t know’ may be telling you something else. Perhaps more than ever, not knowing what you don’t know is telling you to make the most of everything you do know — everything you treasure and enjoy. Now.