Hawaii housing experts worry inflation will throttle back development, buying power
HONOLULU (HawaiiNewsNow) - As the stock market fell Tuesday due to inflation fears, local housing experts are watching another troubling financial development — rising interest rates.
The jump in interest rates is cutting into developers profits, forcing some to rethink their plans.
Developer Stanford Carr said some developments won’t survive.
“Some projects may no longer even be feasible especially affordable housing projects,” said Carr.
Carr said the higher interest rates is also shrinking buyer’s purchasing power.
“You could have qualified maybe for a home about $600,000. Well now with the 6% interest rate, you may only qualify to purchase a home around $500,000,” he said.
The good news is that the supply chain disruptions that was causing havoc in the building industry will likely ease over the next year.
“We had a big spike because you could gouge your buyers simply on supply and demand. Now that’s lightening up,” said real estate expert Ricky Cassiday. “And I think it’ll continue to lighten up because as we go forward.”
Developer Peter Savio said he doesn’t think the high-end will be affected as much because many of the buyers will use cash. He thinks the median prices will likely increase at a time interest rates are also rising.
“Prices won’t decline, they’ll probably go up,” Savio said. “Unfortunately, it’s not going to benefit us.”
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