Market Trends for First-Time Homebuyers
BY LISA LEE
It’s a fact of the marketplace: Where sales go, prices follow. Two new trends show that the marketplace for first-time homebuyers is hot and getting hotter. If you’re looking to buy in certain neighborhoods, or at under $400,000, these markets are becoming significantly competitive.
“In Ewa, the inventory is low and the price point is good for first-time homebuyers. The current low interest rates are firing up people who have low or no down payments to get something while they can,” says Bryan Balisacan, a real estate agent at Prudential Locations with a broad clientele on the West side.
A direct sign of this competition is the multiple offers on houses and the resulting bidups, or sales over asking price. When multiple offers come in on a property, it often sells for more than the asking price. This in turn pushes up the asking price of other homes in the neighborhood as they come on the market.
Bid-ups have taken off both in certain neighborhoods and at the price points that are popular with first-time homebuyers.
Bid-ups by neighborhood
In many neighborhoods that are popular with people looking to buy their first house – Ewa, Kapolei, Waikele and Waipio Gentry – the percentage of sales over asking price for single family homes is running around 30 percent. This means that around one in three houses in these neighborhoods is selling for more than its asking price.
“Ewa and newer developments on the West side attract people with their location and style,” explains Balisacan. “There’s a nice mix of higher-end and affordable properties. They don’t feel like old-style Hawaii, but are fresh and new. Traffic improvements are continuing to be made and Ko Olina’s growth has offered more jobs. This makes it an ideal area to live in for first-time homebuyers.”
Bid-ups by price point
The highest percentage of bid-ups across Oahu are happening with homes priced at $399,000 and under. Almost one-third of all homes between $300,000 and $399,000 are selling for more than asking price. Not surprisingly, this price range has the highest number of first-time homebuyers.
Summer adds to the heat
Summer is the time of year with the most real estate activity and competition in any market. Families looking to move want to get settled into their new homes before school starts again. Families relocating from the Mainland come in at this time, too.
“During the summer, people can take time off to move,” Balisacan says. “They can get their children registered in new schools.”
So, with all this activity, is it too late to find a home?
“It’s never too late,” he says. “It’s important to realize what is going on with the market, so that you can make the best offers given all the factors at play.”
Balisacan continues: “It’s also important to realize that, because of the way the appraisal process works, an appraisal may not come in at your bid. As an agent, I work with clients to be prepared for this. I also put together competitive sales to help inform the appraiser.”
While the buyers in these neighborhoods may be starting to feel a pinch, these trends are great news for current homeowners there. This is an opportune time in these neighborhoods to sell. The current trends mean that “you can get out at a great price and move up into your next neighborhood-of-choice before the competition hits there. Selling and moving now also takes advantage of today’s low-interest rates,” says Balisacan.
If these trends continue, will there be a “trickle up” effect?
“It’s likely that, as competition builds in these neighborhoods and price points, people begin looking into neighboring communities and slightly higher-priced homes,” says Carl Worthy, sales trainer and coach at Prudential Locations. “It could put increased demand on each price point, pushing people and competition to higher prices.”