Fourth Time is the Charm?

Yes, that’s right. The Federal Reserve is at it again. During their November meeting they announced the fourth consecutive 75-basis point interest rate increase. This also marks the sixth-rate hike in 2022 overall. Back in March, the Fed began with a more modest 25-basis point hike but has since become much more aggressive with their policies as inflation continues to run rampant.

What does this mean for Oahu real estate?

While the Fed does not directly control mortgage rates, their policy has a significant impact on the market rates offered to potential buyers. The higher rates go, the more buyers will face difficulty affording monthly mortgage payments.

We’ve already seen the impacts of these increased rates on Oahu. As of September, home sales have dropped more than 30% according to the Honolulu Board of Realtors. Condo sales have also dropped nearly 20% compared to last year as buyers are hesitant to purchase in this high-rate environment.

Interestingly, home prices are still up compared to last year (up 4.8% for single-family homes, and 5.1% for condos). What gives? The short answer: low housing supply.

Even though interest rates are tapering buyer demand, active inventory of single-family homes and condos are still 40% below pre-pandemic levels. This low inventory is keeping prices up despite lower buyer demand.

What if I’m ready to sell my home?

Of course, each home, neighborhood, and owner are unique. If you’re in a position where you are ready to sell, don’t fear the market. The days of multiple over-asking price offers within 24-hours of listing may be behind us, but with the right marketing and sales strategy homes are still moving in this market.

We’ve also worked with sellers to specifically help ease buyer’s interest rate woes. If you’d like to discuss strategies for your home – please schedule some time with us!

Is Cash Still King?

Absolutely. If you’re a cash buyer you’re in an ideal position. You’ve got more negotiating power in a higher interest rate environment and sellers will be more confident to take your offer as you are not subject to a volatile interest rate.

That said, if you are looking to secure a mortgage for your purchase, a good loan officer can help you lock in rates and create strategies that work well for you as the buyer as well as the seller.

We’ll keep watching the market. Until next time ~ mahalo from The Prothero Group.