Home Prices Expected to Dip

(KHNL) - Hawaii's red hot housing market could turn into a benefit for some prospective buyers and a headache for some current homeowners.

Local home prices are dropping a bit.  But they're still pretty high with many homebuyers sitting it out, hoping prices will drop even more. That's because interest rates may soon escalate, along with the cost of other items, including gas.

"It may cause a little more foreclosures than we're used to in the past," said Steve Higa, with the Hawaii Association of Mortgage Brokers.

And that's what some hungry home buyers are banking on.

"You could get a better deal," said Higa.

Higa says properties that go into foreclosure can sell for 10-20% less than the market value. Some experts say within a year or so, you may see more foreclosed properties.

"Folks have a lot of adjustable rate loans, I think people are projecting as their payment increase, they'll have a tougher time making their payments," said John Gray with Bank of Hawaii

But if you're waiting to buy a home because you think a bunch of foreclosures will hit the market, some experts say you might be waiting around for nothing.

Right now, only about 1% of loans nationwide are in the foreclosure process and experts say locally, that number is lower.

Gray also says if the demand for homes remains high, a foreclosed property may still cost a pretty penny.

If you own a home and you're worried that you might not be able to make payments when rates rise, you do have some options.

You could refinance or have your payments reduced for a little while to help you get over the hump.