Condo Appeal: An Affordable Solution for First-Time Buyers
BY LISA SCONTRAS AND LISA LEE
Despite rising home prices on Oahu, 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 find 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. “The fact that the median price of a condo in July is around $345,000 — just over 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. Honolulu Board of Realtors MLS data shows the median sale price for condos island-wide has been increasing over the past 12 months. The median price during the second quarter of this year ($330,000) is up from $305,000 during the same quarter last year, and $293,500 from the same quarter in 2011.
The median price is the middle price of all sales during a time period, so in the month of July, half the condos on Oahu sold for more than $345,000 and half sold for less.
Median prices are as low as $121,000 in Leeward neighborhoods. Other low-priced areas include Salt Lake at $297,500 and Makakilo and Pearlridge-Aiea at $280,000. Many first-time buyers are considering condos in these areas as a way “to get the foot in the door” of homeowner-ship.
Experts suggest talking to a loan officer to find out how your rent payment plus tax benefits from homeowner-ship can translate into a mortgage payment. With that information, it is easy to work with a REALTOR® who can walk you through the home-buying process.
Onishi Andrade suggests that while you may not be able to swing your dream home the first time around, your goal to own a home is attainable.
“Be open-minded and willing to compromise on what you ideally 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 to confirm an affordable price range from a lender and get prequalified. Not only will it keep you realistic, it is motivating to know the bank will lend you money if you find a home you like. It also signals to sellers that you are a reliable buyer.
“We would have liked to look at houses, but after getting prequalified 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 15 percent compared to this time last year. The median number of days on the market for a condo is a low 20 days (compared to 32 during the same period last year) — 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 free homebuyer seminars that not only take you step-by-step through the process, but also can open doors to mortgage credit programs, under-utilized low-interest loan programs and down-payment assisted programs.
“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 high 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.
FREE HOMEBUYER SEMINARS
Sept. 17, 6-8 p.m.
Pearl Country Club
Sept. 28, 10 a.m.-noon
614 Kapahulu Ave.
To register, call your Prudential Locations Agent or 377-4890