I answer this question more than any other and multiple times a day. The majority of my buyers and sellers live on the mainland and they see what’s happening, or what’s not happening, in their cities and towns regarding real estate. So, the natural question for them is, what’s happening in the islands, and does it mirror what’s happening on the mainland?
There’s definitely been a slowdown and there’s no doubt that inventory is rising. I wrote about this last month, that we are returning to what I call a normal market. This is a transition period we are moving through. We are transitioning from a once-in-a-generational real estate market to a more normal market. During the transition it’s only natural for things to slow down and for people to kind of take a wait-and-see approach on the economy, on the real estate market, on the job front, on vacations etc, etc, etc. Some homes are sitting on the market longer and only getting one offer or maybe two. Other homes, like the one we represented the buyer on, sold over asking before the ink was dry on the listing agreement. What that tells us is that great homes, in great locations, with great floorplans and finishes will always sell, sell quickly and for top dollar. Pricing here has stabilized. There are no dramatic drops in appreciation or value and consequently there are no dramatic increases either. But if you’ve been waiting for that perfect property to hit the market when it does don’t hesitate and plan on paying the asking price.
Interest rates hit their peak around June 15 and were sitting at 6% for 30-year fixed. Since then, interest rates have come down in some cases a half percent. We’re seeing mortgage rates in the mid fives right now. Adjustable-rate mortgages can even be had in the mid to low 4’s. Some people are concerned about the Fed raising short-term interest rates again, but it will work in a reverse effect and mortgage rates should continue to decline. You see, the bond market which controls mortgage rates is happy when government takes steps to control inflation. They will view the rate hike as something that is favorable to slow inflation and therefore improving the bond market and mortgage rates. I predict mortgage rates will come down further. They will probably be in the high fours to low fives for the third and fourth quarters and will stabilize. I also predict that as we work our way through the transition period, we’ll see the real estate market pick up again in the middle of the third quarter and stretch into the fourth quarter. Remember, here in Hawai`i our real estate market high season starts in November and runs through April. Just when things are getting cold back on the mainland people are thinking about coming to Hawai`i and picking up a property as a second home.
People always ask what’s a great resource to keep up on what’s happening with inventory, sales, pricing, and appreciation in the islands. I tell people to go to our website, thehawaiiteam.com. We spend an exhaustive amount of time every month updating the stats of closed sales, pricing, appreciation, days on market, list to sale ratio and much more. If you love data, then just keep an eye on the resort pages on our website. Pick your favorite resort… Mauna Lani, Mauna Kea, Waikoloa beach, Hualālai Four Seasons, Kohanaiki, Kūki`o, they are all there at thehawaiiteam.com. We’ll make it easy for you just click any of the links below and it will send you directly to your favorite resort. From there you can see all the data from the first six months of the year. You can even view individual properties that are active, contingent and sold at the bottom of each resort page.
We hope you find this data as valuable as we do and, of course, if there’s anything we can ever do for you here in the Islands I would love to speak with you and yes tell you what’s happening with the market here.
Dan Polimino is the owner of the Hawai`i Team in Kailua-Kona, Hawai`i. He and his team are the luxury residential experts for the Big Island. If you are thinking about buying or selling in Hawai`i, then please reach out to us at team@thehawaiiteam.com
