Loving Living In Hawaii
It is another beautiful day in Hawaii Nei. A lot of my clients are asking what is the status of our Island Real Estate market.
It’s hard to say what the market is going to do. Because of low inventory and low-interest rates we are not seeing price reductions to any great extent. We are still seeing well-priced properties sell in a few days even those listed during the shelter in place. Virtual showings are generating offers. We have a new Covid Addendum which, among other things, allows for indefinite extensions to closing for physical inspections.
Analysts are predicting it will be Real Estate that fuels the recovery. A point in favor of sustained prices is the fact that homes today have a lot more equity than in 2008 when people treated their homes as piggy banks. Current data shows 42% of homes in the US have no mortgages, not sure what that number is in Hawaii or if it is significantly lower since we see a lot of cash buyers moving here. Today average home equity is close to $200,000 so there is some cushion here, too. That said, I think the resort owners who relied on rental income to pay their second home/investment property mortgages without sufficient financial cushion will feel the most pain. We are seeing the majority of new listings over the last week or two in the resort condo market under $1,000,000. That market will have the best buying opportunities. I see buyers who have been priced out of the market by prices at the beginning of the year swooping in to pick those up. However, owners with more resources took their properties off the market. Not just resort property owners across all our island sub-markets. This leaves less inventory now than on March 25th. This also contrasts with 2008 when there was a surplus of homes and condos with so many new projects coming into the market very close together. We have seen some list price adjustments as sellers temper their earlier in the year market optimism. Sale prices are holding firm and we have yet to see massive discounting. However, the number of new escrows and sales is down.
The closest scenario I compare this to is 911. Hawaii Real Estate actually bumped up after 911 and kept a steady climb all the way to the bubbling market 5 years later. My prediction is that Hawaii will become even more desirable because of the low infection rate, low mortality rate, and the acceptance of working remotely. Part of the 911 bump was due to the “Life is Short, what am I waiting for” reaction. We will see that again IMHO. But as you know by now, I am forever optimistic!
Please let me know if there is anything I can do for you or anyone you know who may be interested in Big Island Real Estate. It is always wonderful to hear from you. The main thing to focus on right now is staying healthy and being thankful that we live here! Never has “Lucky you live Hawaii” been truer!