Looking back at my musing as we began the lockdown around this time last year, I was more concerned about homeowners taking proper steps to protect their biggest asset. Of course, none of us knew what to expect. Most, I’m sure, thought the COVID crisis would last only a few months. There’s no way any of us could have predicted or expected the bizarre spike in real estate sales that followed.
Hawaii Real Estate During COVID
The 2020 data included on the chart reflects pre-COVID sales; hence it fairly represents the pre-COVID market. Compare those to today’s numbers, and it’s a statistic that’s difficult to wrap your head around. Consider especially current inventory levels.
At this time last year, Hilo had 102 homes for sale. There are now about half that many. This lack of inventory has driven prices up over 25%. Every neighborhood I track shows a similar trend. Projected demand (see chart) considers homes under contract along with those not yet moving to close (active). The reality is that most homes under contract will sell, which severely reduces the supply number. Of course, a lower supply puts upward pressure on pricing.
Builders are building as fast as possible, but most are faced with dwindling lot inventory. This, of course, means lot prices are creeping up, which in turn means buyers will be paying more across the board.
Where in the world?
I’m often asked where buyers are coming from. While many are West Coast and O`ahu buyers, local buyers are still in the mix. Local buyers rely heavily on zero down loan programs which makes it more difficult to compete. Watch this. Japan buyer activity dropped 61%* last year while Korean buyer activity dropped by 70%* which means once they return, pressure on demand will increase. There are many reasons to believe they will be back.
So, what’s a buyer to do? Your best chance of success is to find the busiest listing agent you can. Let them know you are in the market. They are in the best position to expose you to new inventory. Most sellers favor a buyer who has personally viewed the property. Be ready to pull the trigger because it doesn’t seem things are going to change any time soon!
Information provided by Hawaii Information Service and reported by Pacifi2c Business News