Latest Fed rate hike may also increase jitters in Hawaii’s real estate market
HONOLULU (HawaiiNewsNow) - The rise in interest rates is just one of the forces on Hawaii’s real estate market.
That rise has pushed some buyers to act more quickly to get an affordable mortgage, while sellers are rethinking their asking price.
And the Federal Reserve Bank’s move to boost its benchmark short-term rate by three-quarters of a percentage point may quell inflation, but it’s also increasing jitters in real estate.
“Any clients that I’m working with right now are definitely feeling the urgency to lock in their rates,” said Maila Gilbson Bandmann, a real estate agent with Coldwell Banker Realty.
Gibson Bandmann says buyers are shopping around for mortgages, since rates are up from about 4% in January to about 6% now.
That’s pushing up monthly payments.
“If you buying the same type of home, or you’re mortgaging $500,000, now you’re paying three-thousand dollars, as opposed to 25-hundred last year,” Bandmann said.
On the other hand, more home sellers are cutting their asking price.
“If they don’t get an offer soon, they’re going to drop their price because they realize, ok, the Federal Reserve just made it even more expensive to buy my property,” said Bryn Kaufman, principal broker at Oahu Real Estate.
The site said the number of sellers who reduced their price went up from 234 in February to nearly 600 in August.
Meanwhile, the number of properties that sold above the asking price have dropped, from 535 in May to 303 in August, as the number of offers has gone down.
“The same house a year ago that might have gotten 15 offers is maybe getting five, if its priced appropriately,” Honolulu Board of Realtors President Chad Takesue.
Sales last month were also down 25% compared to a year ago. But 2021 was a record year, when sales of existing single-family homes and condos rocketed 37%.
“Everybody keeps comparing everything to last year,” said Gibson Bandmann. “Last year really wasn’t normal, and so what we’re seeing now is really more normal behavior. I mean, rates typically are around 6%.”
So what happens next? The head of the Honolulu Board of Realtors said it depends on inflation.
“If these Fed increases don’t curb inflation, then we’ll continue to see the bond yields not perform as well and then you’ll have those higher interest rates,” said Takesue.
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