A recent study by Florida Atlantic University and Florida International University reported that Honolulu homes prices are are undervalued compared to other cities across the nation. Interesting, home buyers pay one of the smallest premiums to own a home in Honolulu (.5% premium).
Interestingly, the top five overvalued cities are Boise, Idaho (76.4% premium), Austin, Texas (62.30% premium), Ogden, Utah (59.20% premium), Las Vegas, (53.70% premium), and Atlanta, Georgia (52.30% premium). This really comes at no surprise, since numerous news outlets reported the mass exodus of California residents to other states. According to Forbes magazine, California had never experience a population decrease since statehood.
Due to COVID-19, many companies are allowing their employees to work remotely. Since the start of the pandemic, I have helped numerous clients purchase homes back in Honolulu. All of these people are from Hawaii. In addition, I have helped a handful of people find longterm rentals too. Some of these people have stayed and others have traveled back to their home state.
As I often blog, many people, including myself, thought COVID-19 would tank our financial and housing markets. Surprisingly, it did the opposite. For the past two years, I have helped countless people purchase homes on Oahu. More so, all of these buyers were able to lock mortgage rates in the 2-3% range. With the Federal Reserve fighting inflation, mortgage rates are still ticking upwards in the high 3% range. However, in the big scheme of things, rates are still low.
Pulling data from the Honolulu Board of Realtors, the media single family and condo price have stayed relatively flat for the past few months. The single-family home price are shaded in green.
Yes, prices are still "high." Who would have thought the median single-family home price would be over $1 million? However, could the market be cooling?
First, Hawaii has done relatively well against COVID-19. We are isolated in the middle of the Pacific Ocean and thankfully there has been no over-the-top outbreaks.
Second, since the start of the pandemic, mortgage rates went to an all time low. This was a driving force to why people were buying and why existing homeowners were refinancing.
Third -- this could be the most important point -- what is the shape of a parabola? The line goes up, then it goes tapers off, then it goes down.
If you look the stats, prices were relatively flat for both single-family homes and condos. There are two basic ways to analyze first: (1) Oahu's housing market be tapering off; (2) We at a short-term plateau and prices will uptick in 2022.
Regardless of what is happening, current data is showing that Honolulu's housing market is undervalued right now. Perhaps, now is the best to time. More so, since we are seeing inflation right now, one of the best things to do is to get a mortgage. Why? Your payments are fixed.
Over the course of the longterm, Oahu home prices gradually increase. According to the Honolulu Board of Realtors, the median single-family home price in 1985 was $158,600. Likewise, the median condo price in 1985 was $89,900.
I recently spoke to a friend who owns a mid-tier luxury condo. When he purchased, the price for his unit was less than $500,000. To put this into perspective, a sub 400 studio unit at 801 South Street (a non luxury condo) sold for $451,000 in December 2021. The list price was $439,000.
There are risks to being a homeowner. However, if Honolulu's housing market is undervalued, would not being a homeowner be a path of wealth for you?
Just Listed
1511 Pualele Place. MLS: 202204472. Enjoy the convenience of Kaimuki from this well-maintained property on the lower slopes of Wilhelmina! Historic charm meets tasteful upgrades throughout this 3 bedroom/3 bath home with Diamond Head and ocean views. Utilize a separate downstairs 1-bedroom/1 bath unit for multi-generational living or extra rental income as well. A few blocks away from all of the restaurants and shops on Waialae Avenue but tucked away on a private street off of Sierra Drive, this location is hard to beat. What a fantastic property to call home!
For Lease
Are you looking to start a business in a growing community? We recently listed three commercial spaces in Kohina at Hoopili. Kohina is a master-planned, transit-oriented development neighborhood. The community is the main entrance to Hoopili and it is located near the rail stop and the freeway. The landlord has filed for permits to buildout basic infrastructure in each unit. Click on the hyperlinks for more information.
Home Maintenance
Let's be honest. I bet you do not know when the last time you re-caulked your toilet and tub. This home maintenance tasks is important because water -- even the smallest amount -- can cause damage.
I understand there are arguments about not caulking the base of your toilet. Some will argue that that will prevent you for determining if your toilet is leaking. That is a legitimate point. However, if your toilet is old, you can buy a new toilet and install a brand new wax seal. After you install a new toilet and wax seal, give it a few days to see if there are any leaks. If there are no leaks, you can caulk the base of the toilet.
If you live in a condo or townhome, the association might have the authority to inspect your unit to see if the tub and toilet are properly caulked. Water damage, especially in a condo and townhome, can be a nightmare since the water can leak to other units.
Ramblings
Monster Homes
Tony Shi, the owner of 2761 Pacific Heights Road, was recently denied his building permits by the City and County of Honolulu. It was recently reported that the home was being to be three stories and nine bedrooms. Per the Department of Permitting and Planning website, the home was going to be nearly 5,000 living square feet.
Mortgage Rates
In order to combat inflation, the Fed raised rates. This then caused mortgage rates to increase to the mid and high 4% range. Will this slow our housing market on Oahu?
Kapahulu
I will be listed a teardown house in Kapahulu in the next few months. The parcel is 5,000 land SF and the zoning is R-5. The lot is level too.
Stay safe and healthy.
-Roda