The Real Estate Market on Oahu, Hawaii
By: David Kucic (RA) GRI, ABR, e-PRO
What is really going on? Why are homes staying on the market longer than usual? What happened to the real estate market that made everyone excited about purchasing a property a little over a year ago?
The truth of the matter is that there are several factors that are driving our current market such as supply and demand, interest rates and loan programs available to buyers.
One of the major issues right now is with "Mortgages". Of course, cash buyers won't have this problem. The lending industry has taken a real beating lately because of some of the "creative financing" programs that banks have offered within the past several years. During the time when the real estate market was hot and prices kept going up, lenders found ways to be creative in order to get more and more people qualified to buy homes. Some of you may be part of that group of buyers who are in on those creative loans. Many of the loans had "adjustment periods" and now they are starting to become un-affordable for the homeowner. Many homeowners are in a bind because they financed 100% of the value and cannot sell their home without taking a loss in today's market. They bought when prices were high and they cannot sell because they will not get enough from the sale to pay off their mortgage. Some lending institutions will allow a "short sale" which means that the home can be sold for a loss and the lender will "eat" the loss. However, the homeowner will have to claim the lost amount of money as income on their personal taxes. See your tax professional for more information.
With the shake-up in the lending industry, the number of qualified people that can purchase properties has been reduced dramatically. The ever so popular stated income - 100% loans that have left many people in a bind have been removed from nearly all lenders portfolios and are only available at much higher interest rates. Leniency for poor credit scores and stated income is no longer an option. You must have decent credit history and a verifiable job with adequate income if you want to get a loan for a home. This means that there are many less qualified buyers than there are homes available.
The pricing of your home remains one of the most important aspects of selling your home. If it is priced well, your home has a much better chance of selling. You can't rely on pricing it like the others that have sold in your neighborhood because you must remember that our market is different than it was even just 2 months ago. If there are less qualified buyers, you need to find out how to attract them to your property.
Hawaii will always be a desireable place to live, work and play. Now, more than ever, you need a Realtor on your side to help you get through this tough time.
David and Tonya Kucic
Hawaii Home Buying and Selling Team