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September 2020

Aloha!

The market has been going fast and furious for many buyers. There is a severe lack of inventory on Oahu and interest rates are at historic lows. If you have any desire to sell, I would love to have the opportunity to discuss your thoughts. If you are thinking of purchasing, it is important to have your finances and goals lined up and ready to go.

With a little planning, we can work together to make your next move an easy and smooth transition.

I always look forward and enjoy hearing from you! You are important to me!

If you know anyone who may benefit from my monthly newsletters, please feel free to share! Have a wonderful day and be safe.

Sincerely Lila

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O'ahu market report

Oahu Housing Market Sets New Records

By Scott Bradley, Co-President

The Oahu single-family home market is on a record-breaking streak. The median price of a home in August was $839,000, an increase of more than 6 percent that shatters the previous record high for Oahu. The strength of the single family home market is further shown in the pace of sales, with 370 closed transactions and a whopping 24 percent increase in the number of pending sales to 662. This 15 year high in the number of pending transactions means further strength in the market is likely over the coming months.

 

Both supply and demand together are pushing single family prices higher. The strong pace of sales is being converging with a historic drop in listing inventory.  The total number of homes available for sale has dropped dramatically over the past several months from a high of 1,279 listing a year ago to just 687 as of late August.  This perfect storm of increased demand and lower inventory means that well-priced listings sell immediately and with multiple offers, often much to the frustration of homebuyers.

 

Savvy buyers are adapting to the new reality and adopting aggressive tactics to position their offers to be accepted.  Some of these strategies include  preapproval letters from their lenders with language certifying verified documents, letters from buyer to seller sharing their personal story and pleading to be chosen, contracts with appraisal and escalation clauses, quick closing and inspection timelines, and even paying traditional seller costs like termite inspection and treatment.

 

In the condo market, we are beginning to see bounce back from a low point in May with an increase in the number of transactions. The condo market absorbed back-to-back double blows from the tightening of vacation rental regulation enforcement last fall followed by the pandemic. Buyer preferences shifted markedly towards single family homes as a result of COVID-19, and quarantine rules discouraged potential non-residents from traveling to Hawaii.  After hitting a low point in May, both closed and pending condo sales are showing signs of recovery. The median condo sale price rebounded 2.5 percent to $430,000 compared to the same month last year, while the average price was up an impressive 8.5 percent to $527,000.

 

It is important when looking at the condo market to be aware that not all areas are experiencing the same shifts. Waikiki condo transactions are down 55 percent from the same period last year as the neighborhood hardest hit by changes in transient accommodation regulations and the nearly complete halt of tourism. Surprisingly, the median price of a condo unit in Waikiki has increased 3.5 percent when compared to the same period last year, demonstrating the resiliency of the value of real estate value on Oahu.  On the other side of the spectrum, the condo market in Hawaii Kai has seen a 13 percent increase in number of transactions compared to the same period last year. Condominiums in Hawaii Kai are likely selling well due to low interest rates, as they are favorites of local buyers and first-time homeowners.

 

The takeaways are: When shopping for a single-family home, come prepared. Work with your real estate agent and lender to be competitive and move quickly when you find the property you want. If you have been on the fence about selling, the lack of inventory right now makes this an ideal time to list. Our condo sales have slowed overall, but prices hold steady – a testament to the long-term value of owning a piece of paradise.

HOMEBUYERS’ ADVICE

The Renewed Appeal of Suburbia in the Mainland and Hawai'i

It’s typical for single-family home sales to surge in the spring and summer, but this year, there are some differences due to Covid-19. The pandemic is causing more urbanites to move out of the city say The New York Times, Forbes.com, NPR.org and other news services.

Many of the attractions that make city living attractive, such as theater, shopping and dining out, simply aren’t available, causing some homebuyers to feel pent-up in their small apartments. They’re questioning if there isn’t a better way to live.

The result is a notable increase in home searches and purchases for single-family homes in smaller towns, exurbs and suburbs as many city-dwellers, particularly millennials, decide to ditch living in close quarters, paying high rents and home prices, and settling for views of buildings instead of trees.

In Hawai'i this also rings true. As you see in the current market stats, Single family home prices are up, closed sales are up, and median days on market are down. Our lifestyles are evolving with new priorities, new needs, with more space to live, work, and play. 

FINANCIAL ADVICE

Mortgage Guidance for the Self-Employed

Yes, you can get a mortgage if you’re self-employed, but it’s challenging in the age of Covid-19. Guidelines are changing monthly as the crisis continues, but the following requirements are generally true:

Work history: According to USnews.com, you’ll need a two-year employment history. Fluctuations in earnings are acceptable as long as you can show stable or increasing income. A shorter history may be okay if you’ve been employed in the same industry for a period of at least two years.

Down payments: You’ll likely need to put 20 percent down, which minimizes risk to both you and the lender, but you may be able to get away with as little as 10 percent down if you have a FICO score of 720 or above, says NJlenders.com

Cash reserves: If the worst happens and your business declines, you must show enough cash on hand to pay your mortgage regularly and on time.

Credit history: You’ll need a high credit score and an income to debt ratio of 43 percent or below, depending on guidelines. Lenders carefully check how you use revolving credit, other outstanding loans, and payment histories.   

Documentation: Supply your ID, your personal and business tax returns for two years, earnings and bank statements, business name verification plus evidence of business such as a web site, invoices, etc., license if applicable, list of debts and expenses, and payment verification for your home’s rent or mortgage.

Loan requirements are fluid, so contact your lender to learn the latest guidelines.

If you would like to further research this subject, I am happy to refer you to reliable local lenders that can offer solid advise.

HI Lic #: RS-63620
46 Hoolai St. #D Kailua, HI 96734

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