First-timers see opportunity in condos

BY LISA SCONTRAS

Despite half-million-dollar home prices, first-time homebuyers are not letting price growth keep them from jumping into today’s real estate market. By starting small and building equity, many have found that they, too, can own a piece of the pie.

“Condos and townhouses are the perfect starter home,” says Susan Onishi Andrade, Realtor and partner at Prudential Locations LLC. “The fact that the medianpriced condo is around $300,000 half that of a single-family home appeals to first-timers.”

Buying a condo still is an affordable way to own a piece of Hawaii real estate.

In 2011, the Honolulu Board of Realtors MLS data show the median sale price for condos islandwide was $300,000, down -1.6 percent from $305,000 in 2010. The median price is the middle point when sorted in price order, so half the condos sold for more than $300,000 and half sold for less. The median condo price, for example, in the Downtown-Nuuanu area was $344,200 last year. In Waikiki during the same period, the median condo cost was $286,500.

Median prices were as low as $89,000 in MakahaNanakuli. Other low-priced areas include Mililani ($257,000) and Salt Lake ($280,000). Many first-time buyers are considering condos in these areas as their get-a-foot-in-the-door purchase opportunity.

Experts suggest talking to a loan officer to find out how your rent payment might translate into a mortgage payment. With that information, it is easy to work with a Realtor who can walk you through the homebuying process.

Onishi Andrade suggests that you may not be able to swing your dream home the first time around, but your goal to purchase is attainable.

“Be open-minded and willing to compromise on what you want versus what you can afford,” she says. “Consider your first purchase as a stepping-stone home and you will be headed in the right direction. My first purchase was a tiny studio apartment back in 1988. It doubled in price several years later and helped me to get into a larger home.”

The key is in confirming an affordable price range from a lender. Not only will it keep you realistic, it also is motivating to know the bank will lend you money if you find a home you like.

“We would have liked to look at houses, but after getting pre-qualified we found that what we could afford to buy right now was a two-bedroom, one-bath apartment,” says a recent first-time purchaser. “It was necessary to expand our search area, but we are happy we got into the market now. We are not throwing rent money away and we’re enjoying the tax savings that comes with homeownership.”

The universal appeal of condos on Oahu is apparent. According to Onishi Andrade, statistics show condominium sales are increasing, up 2.2 percent in 2011 after rising 10 percent in

2010. The median number of days on the market for a condo is low at 42 days a good indicator of market strength in that category.

Other buying strategies for those looking to purchase their first property include the tried-and-true practices of going in with your parents or taking on a renter.

In San Francisco, where condo prices often compete with Honolulu for being the most expensive in the country, a unique buying strategy has evolved. Out of necessity, buyers will opt for “tenancy in common” a form of joint ownership of a property that involves family or friends buying a property together, hui style, just to get into the game.

Onishi Andrade is wary of the pitfalls of taking on the huge investment responsibility with a friend, but agrees it is an alternative way to get into real estate ownership.

Lastly, there are first-time buyer seminars that not only take you step-by-step through the process, but also can open up doors to mortgage credit programs, under-utilized low-interest loan programs and down-payment assisted programs. Prudential Locations’ next seminar will be Feb. 29 from 6 to 8 p.m. at the Pearl Country Club. To register or for additional dates and locations, call 377-4642.

“Renters should seriously consider taking advantage of these programs before they’re discontinued,” says Onishi Andrade. “It’s like getting free money.”

Don’t be scared off by the exorbitant price tags on homes. It’s not necessary to overextend. Start small, get educated and take that first step. Find a great little condo and you’ll be on your way.

First-Time Homebuyer Seminar

Feb. 29 at Pearl Country Club, 6-8 p.m. Check in at 5:30 p.m. To register, call your Prudential Locations Agent or 377-4642.

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