BY LISA SCONTRAS
With the volume of home sales up and inventory levels down, Oahu’s housing market is expected to continue its steady recovery in 2013.
“As 2012 comes to a close, we can be extremely optimistic about the strength of the market going into 2013,” says Joe Paikai, president of the Honolulu Board of Realtors.
“Each month that the recent home price upturn continues, confidence grows,” explains Kenneth L. Miller, senior vice president in the Investment Services Department at First Hawaiian Bank. “Nationally, on average home prices have been rising for about nine months. New home construction is finally starting to recover, and housing affordability – the proportion of the average income needed to fund a mortgage payment on the average home – is very attractive.”
Miller cites economic indicators, including components of gross domestic product, labor market stats, income, consumer and business surveys, and the state of stocks and bond markets, as his sources – which generally point to a continued sluggish but positive growth of the overall economy, which will help fuel the housing market across the country.
Expanding payrolls, he says, indicates improving business confidence and is an important driver of consumer demand. Mortgage interest rates are also expected to remain low for some time, which will continue to support a stronger home market.
When asked about concerns in housing in 2013, Miller says there are still many homes, nationwide, with mortgages in various stages of default that have not yet been listed for sale. Other concerns include the possible curtailment of the home mortgage interest tax deduction.
Yet even while these are not considered normal market conditions, there does seem to be less anxiety surrounding the housing market this New Year and consumers are making a point of re-evaluating opportunities and making goals. In Miller’s view, if one of your goals is to buy real estate in 2013, the timing looks good.
“Real estate prices move in long cycles, so the main thing is to make sure that you can be patient with your investment and be prepared to leave the money there for a long time,” he says. “Locking in a low, fixed mortgage rate removes a lot of the risk. Home prices nationwide are still well below the peak, so it looks like a good entry point.”
Historically, he adds, improvements in the housing market and the overall economy tend to move in paralell.
“Housing is typically important in (economic) recoveries, both home building, and related sectors like hardware and appliances, and also the effect on consumer confidence. After being a drag on growth for years, housing is now aiding the nation’s economic recovery.”
In spite of the trend toward improving conditions, the Great Recession may leave a long-time mark on the real estate market. Lessons learned have prompted savvy consumers to fall back on good sound financial strategies, such as evaluating investments by balancing expected return versus potential risk. For this, professional help is recommended and having a Personal Banker at First Hawaiian Bank can help you in this process.
Whether you’re a first time homebuyer or looking to downsize, the first step is to consult with your personal banker to run the numbers and prequalify you for a mortgage loan.
“In many cases, today’s low interest rates can make mortgage payments more attractive, compared to renting,” says Miller.
With 30-year fixed mortgage rates currently under 4 percent, Miller says the housing market on Oahu is healing and the timing appears favorable to invest in real estate.