A Transitioning Hawaii Real Estate Market
Recently, sales prices and the volume of closed sales have dropped for both condos and homes on Oahu. This change was spurred on by the Federal Reserve’s increase in interest rates in an effort to stem high infl ation. The Federal Reserve is likely to increase interest rates a couple more times this year, so real estate prices will likely continue to remain fl at over the next couple of quarters.
What does this mean for the real estate buyer and seller? It simply means that we are returning to a more normal market. What was a crazy seller’s market is now transitioning towards a balanced market where the seller and buyer have equal leverage when negotiating a real estate transaction.
Buyers may have a bit more time to investigate a property and the surrounding neighborhood before submitting an offer. Additionally, the terms on the offer won’t always have to be so seller-friendly. There will still be instances where a property is located in a highly desirable neighborhood and is priced well, which will generate multiple offers at or above the listing price. But these instances will be less frequent.
Sellers may have to be more patient in selling their homes. They may not immediately get multiple offers over the asking price, as was common in the recent past. Proper prepping and staging of the home will become increasingly important, as good preparation will make the property stand out, sell faster, and sell at a better price.
As a homeowner or investor, it may be a good time to upgrade your real estate portfolio. Sell your less expensive property now and purchase an upgraded property while real estate prices are fl at or declining. As a homeowner, you may be able to avoid capital gains taxes on the fi rst $250,000 of gain as an individual and the fi rst $500,000 of gain as a couple. As an investor, you can defer paying any capital gains taxes on your sale by executing an IRS section 1031 exchange.
In a broad overview of the real estate market in Hawaii, mortgage interest rates are about in line with the average over the past 30 years. Buyers should be fi ne buying now if they take a longterm perspective on their purchase, as historically, Hawaii real estate prices have performed well over the long run. If buyers feel that interest rates will be dropping in the future, buyers can take an adjustable- rate mortgage now and refi nance to a fi xedrate mortgage if rates drop. If sellers are considering selling within the next couple of years, now would be as good a time as any. Otherwise, if sellers intend to hold their real estate longer than a few years, Hawaii real estate prices will rise over time.
The Kiriu Team is the No.1 team nationwide in the Better Homes and Gardens Real Estate network. Contact Myron Kiriu to learn more about buying, selling and real estate investing in Hawaii.
MYRON KIRIU
REALTOR, OWNER, CEO
Better Homes and Gardens Real Estate Advantage Realty
CONTACT 808-864-9000
EMAIL myribk@betterhawaii.com
WEB myronkiriu.com
