The COVID-19 pandemic has wreaked havoc on every aspect of life. We're in uncharted territory and not having a clear solution has caused our financial markets to be volatile.
Our housing market has been upended. Open houses are being cancelled, sellers are delaying to list their home, and we have a fearful buyer pool. In addition, even if you are in escrow, the State has closed its doors to the Bureau of Conveyance; they are now doing e-recordings.
According to data from the MLS, there has been a double digit decline in new listings for single family homes and condos and pending escrows in March 2020 compared to March 2019. If one is not afraid of our current environment, the only benefit is low interest rates. It will be interesting what happens this month.
Real estate heavily depends on face-to-face interactions. I was able to show properties before COVID-19 became worse. Since then, to promote social distancing, I've been communicating with clients via phone, text, email, FaceTime, digitally, and virtually. Although technology has allowed me to and my clients to pivot, nothing can beat physically being at a property.
If you're not in a rush to buy or sell, waiting until things get better could be a good strategy. For sellers, you can use the time to prep your home. This could include small do-it-yourself home remodel projects to gathering all the due diligence documents. For buyers, you can use the time to study the market and to analyze your financial situation. With the economy slowing down, you don't want to buy a home if you could possibly be laid off.
Before things escalated with COVID-19, I was able to help to help my client purchase a unit at Hale Ka Lae. What made the purchase easier was the unit was vacant. I was happy my client secured a mid 3% mortgage rate and he was able to purchase below the last sold comp; it was also a sub 45 day transaction too. In a lagging real estate market, not overpaying is very important. We are in a "race to the bottom" market and it also feels great to get a good deal.
Hale Ka Lae is located in Hawaii Kai. I've helped multiple buyers purchase units here. The maintenance fee is reasonable and it has luxury-like amenities at a much lower price than Kaka'ako. Let me know if you are interested in living Hawaii Kai.
It was recently reported that Ke Kilohana and Waikiki Marina had a drastic increase in their monthly maintenance fee. Within a year of opening, Ke Kilohana's maintenance fee increased 50%, while Waikiki Marina's maintenance fee hit $1,800 for some owners.
What's also concerning is Ke Kilohana is mainly a reserve housing condo. Due to this, Hawaii Community Development Authority has restrictions about allowing owners to refinance. When rates went down in March, reserve housing homeowners couldn't refinance to a lower rate. Here's a blog article that Shane Irish and I recently wrote:
I was able to help five clients refinance in March. All of my clients were able to significantly reduce their mortgage rate. One client actually locked in a sub 3% conventional loan rate! My lender and I are currently working with a few clients who could be good candidates to refinance. Just because rates are low, doesn't mean one should automatically refinance. When one refinances, it's important to determine the breakeven point and what closing costs are involved.
Ililani, a new condo in town, recently had their reserved housing lottery. Due to COVID-19, I am curious if buyers are going to withdraw their applications due the fear of jobless. Although it takes years to build a new condo, many buyers might find it challenging to see past the current realities of COVID-19.
Stay safe and healthy.