Oahu real estate — is it hot or not? Hawaii has long been recognized as one of the most expensive real estate markets in the country. Being in one of the most desirable places to live certainly doesn’t hurt.
But what does the real estate scene look like on Oahu now? Is it a good time to buy? Is it a good time to sell?
Let’s look at the overall picture.
Record Low Mortgage Rates
There’s a lot of strange things that have happened in 2020 — and not many of them have been positive. However, for anyone interested in real estate, the mortgage rates have done some strange, amazing things.
No less than 13 times this year, the nation has set new records for the lowest interest rate. As of November 2020, we’re seeing unheard-of interest rates like 2.72% – 2.84%. These astonishingly inexpensive loans are drawing buyers out of the woodwork, despite concerns about the pandemic.
After all, who wouldn’t love to get a home loan at these ridiculously low rates?
Escaping the Mainland
As fall sets in on the mainland each year it’s normal to see people from the mainland, particularly the West Coast, showing interest in Hawaiian real estate. This year, the trend seems to be even stronger. From January to June of 2020, California residents alone have bought $587.6 million dollars worth of Hawaiian property.
With the new wide-spread capability of working from home, an island lifestyle may now be more accessible to many people. Now that the home’s location in comparison to good jobs is not as big as a concern, people are free to live where they please. And many people are pleased to live in a place with nearly perfect weather every day of the year.
Also, experts conjecture that some people may be fleeing the mainland in search of a “safer” place to be during the pandemic.
Virtual Home Selling
To cut down on the spread, the use of virtual tools for home selling has exploded. The technology for creating detailed photographs and virtual tours has already been available, of course. But the pandemic has spurred on its use and made it more commonplace.
Now, buyers can sit in their living room on the mainland and tour homes on Oahu with the help of a knowledgeable real estate agent. They can also tour the home virtually with a home inspector as they go through the house looking for any flaws. This is making Hawaiian real estate even more accessible to people all across the country.
The tools work well enough that it is feasible for buyers to purchase a home without ever having set foot in it. You can imagine how this is facilitating moves to Hawaii!
Like most of the mainland, the pandemic has people holding off on selling their houses. A survey from Zillow found that sellers are reluctant to sell right now for four main reasons:
- They think they can get a higher price by waiting
- Life is too uncertain right now
- Finances are too uncertain
- COVID health concerns
However, because of the low mortgage rates, there is an abundance of buyers. Couple that with so many reluctant sellers and the demand for homes is going up, but there is not enough inventory to match.
As you know from simple economics, increased demand and decreased inventory translate to higher prices. However, the economy in Hawaii, being largely dependent upon tourism, has taken a hard hit during the pandemic. Home prices typically begin to fall with a weak economy.
So, what does this mean for real estate sale prices?
They are, for the most part, remaining steady in Hawaii. Median sale prices, in general, are higher than they were last year, which is on track with what usually happens in the Hawaiian real estate market.
A savvy real estate agent can take advantage of the abundance of buyers to drive up the price of a property they are trying to sell. To do this, they may aggressively price the home slightly under market value to attract attention. Once a few buyers are interested, a successful bidding war can drive the final sale price up several thousand dollars.
Single-Family Homes vs Condos
An interesting trend is emerging through 2020 on Oahu. Single-family homes are selling like hotcakes, whereas condo sales are slowing down. It is the largest divergence seen between these two types of sales in decades.
There are a couple of theories for this. First, social distancing and concerns about the virus may be leading people to value their space and seek a bit of distance from their neighbors.
Additionally, people are spending far more time at home. Extra space and private outdoor areas are appreciated more than ever and being cooped up in a little apartment is less appealing.
Furthermore, working from home reduces the need to be close to work. This allows people to purchase single-family homes farther away from the city center and enjoy a little bit more wide-open space for themselves.
Real Estate Outlook for 2021
What does real estate look like in Hawaii for 2021? For now, it looks like it will remain steady. Zillow is predicting a 6.3% rise in home prices in Honolulu over the next year after seeing a 0.3% decline over the past year.
More people who have always dreamed of moving to Hawaii but were held back by a lack of employment opportunities may start coming. This will help inject more money into the Hawaiian economy and get things moving again.
As more people begin to compete for limited real estate in Hawaii, prices could shoot through the roof over the next few years. Only time will tell for sure. For now, however, the future of Hawaiian real estate looks particularly bright.
Interested in getting in on your own little piece of paradise? Don’t hesitate to reach out to our real estate team to learn more!