Is This The Best Time To Buy A House Or Condo In Hawaii?

The answer to that question isn’t the same for everyone, so let’s start with my own personal experience. I purchased my first place, a townhouse on the golf course in Waikele, from one of the biggest developers in Hawaii for what I thought at the time was a lot of money. I had already been in the mortgage business for over five years, so I figured I was a pretty savvy customer. Unfortunately, supply at that time was greater than demand, and the developer continued to build similar condos, townhouses, and single family homes for less and less money over the next few years. In a short period of time my property was worth a whole lot less than my existing mortgage. I was quickly reminded of my Economics 101 class from college.

A lot has changed in Hawaii’s real estate landscape since then. I’ve been telling anyone who will listen to me for the past year or so, that right now is a great time to buy a home. This is not because I’m prognosticating we’ve hit rock bottom on real estate prices. It’s my personal opinion that after the recent mortgage meltdown, it will be 2013 or 2014 before we can turn the corner on that housing market collapse and have regular, sustained, growth in Hawaii real estate values. The reason being, that even though Oahu appears to have made its predictive valuation correction, the neighbor islands are lagging behind significantly in their economic recovery and thus property values have been further affected.

What I am saying is that the actual cost of purchasing a home right now is probably near the bottom or has actually hit the bottom. The difference is that cost is determined by both the price of the home AND the expenses associated with mortgaging that home at the best possible terms and conditions available. Unless you’ve been hiding under a rock for the past few years, you’re firmly aware that the process of qualifying for a typical mortgage has become infinitely more cumbersome and restrictive. There’s no doubt that further measures are already in place that will only continue to inhibit lending practices moving forward. Additionally, however, and more importantly, mortgage interest rates have recently made a significant move south and are currently at historic lows. Therefore, it’s a fair assessment that the costs associated with obtaining a mortgage, including interest rates ,will surely increase as the year goes on.

A balanced market where prices are stable can handle 5 to 6 months of active inventory. Anything less than 5 months typically constitutes a seller’s market as there are not enough houses to meet buyer demand. This usually results in price appreciation. Anything more than 6 months constitutes a buyer’s market as there are not enough buyers for the number of houses on the market. This usually results in price depreciation. According to a recent Hawaii Association of Realtors (HAR) Housing Supply Overview report, there is currently a 5.5 month supply of inventory in Hawaii. Although trending down quite a bit from last year, this represents a stable and balanced real estate marketplace; which by the way is much healthier than the national average!

Therefore, whether you are interested in moving up to accommodate your growing family, or looking to realize your dream of home ownership, it doesn’t take an economics major to understand that right now is likely one of the best possible times we will see in the next ten years or more to purchase a house or condominium in Hawaii. Mann Mortgage continues to serve its community and clients with a wide range of mortgage products, including those with minimal or no down payment options. Please contact me or one of my loan officers if you’d like to determine your best course of action to achieve your goal of home ownership.

- Aloha, Scott W. Farley

Scott W. Farley
Co-Owner/Branch Manager
Mann Mortgage, LLC
NMLS# 261382

Mann Mortgage is a member of the Mortgage Bankers Association, Hawaii Association of Mortgage Brokers, National Association of Mortgage Bankers, and Fair Housing and Equal Opportunity (FHEO).

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