The drumbeat of bad news for the housing market in general continues to make for great press. The theme that it will never recover is oddly reminiscent of the opposite theme a few years back that it would never go down. Anyone who’s been around a while knows both themes are wrong.
So, if you’re considering buying a home in Hawaii, as a second home, part time vacation rental, eventual retirement, or permanent residence, the question is: is now the time to buy?
Here’s five reasons to seriously consider making your move:
1. Mortgage rates are still at historic lows. Despite predictions that rates have to rise (and they probably do), this hasn’t happened yet.Â 30-year fixed rates are in the 4.5%-5.0% range, and 15-year and adjustable rates are below 4%. If rates go up a full percent in a year from, say 4.75%, then the same home would have to drop in price by at least 10% for the mortgage payment to be about the same. Not many are predicting that kind of drop.
2. The worst of the price declines is probably over. For most markets, prices have declined by more than 30% since the market peak. Some condos in Hawaii are back to 2002 prices and some in Waikoloa and Mauna Lani have fallen below the original developer price when they were built in the early 2000’s. There are still foreclosures hitting the market, but they have declined from 26% of overall sales in the first quarter of 2010 to 14% of sales in the first quarter of 2011.
3. In many areas of the Big Island, inventory has dropped dramatically. While this lack of supply has not pushed up prices yet, we have seen instances where a desirable listing comes on the market and receives multiple offers, in some cases closing above the list price. Great deals can still be had, but they are not as plentiful as they used to be.
4. Market bottoms can only be seen in hindsight. When you look back on a graph of home sale prices and you see a “v” shaped low point followed by a move up, you can say that point was the bottom. The trouble is, that was six months ago, and now the new theme is a beginning recovery and sellers are not so willing to negotiate. Some of the shrewdest deals are made when running counter to what “everybody knows.”
5. See photo above. There’s a lot more where this came from. In terms of climate, lifestyle, and just sheer beauty, Hawaii is unique…and it’s in the USA!