One of the critical factors coming into play in the Oahu real estate market is affordability. Even though prices are still surprisingly reasonable in many places, Hawaii has never been a inexpensive place to buy a home. With prices approaching record levels, it is becoming increasingly expensive and less affordable.
In December of 2012, the median price single family home on Oahu was $595,000 (though the median for condos was closer to $315,000). Interest rates on a 30 year fixed rate loan were about 3.5%.
That means, if you bought the median priced home that month with, say 20% down ($119,000), your principal and interest payment would have been $ 2,412.
In December 2013, the median price of a single family home on Oahu was $629,500 – about 6% more than in December 2012. If you bought that house last December, you’d have been out of pocket $6,900 more for the 20% downpayment and your mortgage payment would be $2,540 – $128 a month more for the same house.
So the cost of waiting just one year would be $6,900 (additional downpayment because of appreciation in values) + $128 a month for 30 years – $46,080! Of course, you would probably not stay in that house for 30 years, but still, the cost of a 12 month delay, in this market, could push the limits of affordability.
Here’s the good news: Though rates rose a full percentage point from 2012 – 2013 (December 2013’s rate was about 4.5%), rates have taken a bit of a hiatus for the time being. Right now, a 30 year fixed can be had for about 4.3% – less than even two months ago. Nobody expects rates to stay this low for much longer and most predict a slow creep upward over the next year.
So, the question of the moment is this:
What are you waiting for?
If you’ve dreamed of owning a piece of this wonderful place we call home, NOW is the best time – and may be the last time – to do it. If you’ve been thinking of selling and trading up, NOW is when you will get the most for your money. Next year, you will be looking at even more cash out of pocket to buy the same house and a payment that will almost certainly be higher. Give us a call at Help-U-Sell Honolulu Properties and let’s get started!