Can higher mortgage rates cool Hawaii’s hot real estate market?
HONOLULU (HawaiiNewsNow) - The Honolulu Board of Realtors says the median price of a single-family home on Oahu fell slightly to $1,105,000 for April. The number of homes pending sale also fell — a sign rate hikes by the Federal Reserve are starting to have an impact.
Mortgage rates have been at historic lows for the past two years, which led to strong demand for real estate and record high home prices. Since the Federal Reserve began raising interest rates to rein in soaring inflation, experts say the market could start to stabilize.
“It’s high demand, low supply,” said Rex Alcubilla, who’s been outbid by other homebuyers who offered all cash, large deposits or way above the asking price. “When my wife and I are going around and trying to look at these houses, times, you’re going up against like 10 to 15 families are looking for the same thing.”
Jaymes Song, an agent with Better Homes and Gardens Real Estate, expects the bidding wars to continue.
“We’ve had the only the best, best, strongest, most aggressive buyers, being able to purchase homes. So there’s still a big backlog of buyers still there looking for housing,” Song said. “We’re at near record prices and very historical, low inventory rates. So it’s a very lopsided overwhelmingly seller’s market still, that should start changing, because of the rising interest rates in the next three to six months.”
Mortgage rates surged above 5% for the first time in more than a decade — almost double what they were a year ago.
“Whatever they could afford before, they cannot afford now. Let’s say if you are able to purchase $2 million before with a lower rate. Now, your budget is most likely reduce to let’s say 1.5 million or 1.6 million,” said Vanessa Kop, executive vice president at NAI CBI Hawaii.
While you may have missed the boat on a 3% rate, realtors advise people not to wait if they really want to buy.
“My parents had interest rate mortgage rates of above 10% in double digits. So on a historical perspective, maybe 5%, 6% still very low,” Song said.
For now, some discerning buyers say they’re waiting.
“I’m kind of just watching the market to see if it will be, even though the interests are higher, we’ll see if that plays into kind of what consumers mindset is, if it’ll be less buyers or not,” Alcubilla said.
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