How is the real estate market doing now?
It appears that inflation numbers are decreasing and may finally be under control.
Therefore, the Federal Reserve may pause on future interest rate hikes.
What has this meant for Hawaii’s real estate market, and what does this mean for the future? As expected, the increase in interest rates has resulted in a decrease in the volume of closed real estate sales. The typical buyer that requires financing cannot buy as much as they could in the past few years. As a result, there have been decreases in both the number of closed sales and the median sales price. Interestingly, due to the lack of inventory of properties for sale, real estate prices have not dropped as much as you might expect. The year-to-date median sales price for a home has dropped approximately 8% from last year and condos have dropped approximately 2%.
Over the last few years, we have been spoiled with extremely low mortgage interest rates, but on a historical basis the current interest rates aren’t actually high. Over the past 50 years, the average interest rate for a 30-year fixed mortgage is 7.75%. Currently, the 30-year fixed mort gage rate has fluctuated between 6-7%, so we are still below the historical average.
We are simply in a normal real estate cycle. We could not expect interest rates to stay low and real estate prices to increase forever. As a seller, real estate prices are not expected to rise dramatically over the next couple of years, so it may be a good time to sell now if your desire is to sell within the next two years. As a buyer, if you find the right home for the long term, buying at the current mortgage interest rates may not be so bad since, historically, the current interest rates are not high. If you believe interest rates will fall in the future, you can purchase with an adjustable-rate mortgage now and refinance if the rates drop.
Additionally, upgrading your real estate portfolio in today’s economic environment could be beneficial to your family. Selling your principal residence (or investment property via a tax-deferred 1031 exchange) while prices are still relatively close to their highs and buying a more desirable property as the market dips a bit may work to your advantage.
We are so lucky to be able to live in a place like Hawaii, where the climate is wonderful, the scenery is absolutely beautiful and the people are amazing.
MYRON N. KIRIU
Realtor, Owner, CEO
Better Homes and Gardens Real Estate Advantage Realty
CONTACT 808-864-9000
EMAIL myrink@betterhawaii.com
WEB myronkiriu.com
