Hawaii – Should You Say “Aloha” to a New Home?
When you live in paradise, it’s hard to imagine that anything could ever go wrong, but the recession proved otherwise. Since other people couldn’t afford to come visit paradise, Hawaii’s economy took a huge hit.
As 2012 came to a close, Hawaii’s housing market was a classic case of supply and demand, and that trend is expected to continue for the foreseeable future. The number of homes for sale in Hawaii is down (especially on Oahu, Hawaii’s largest island and home to Honolulu), but the demand is getting stronger. As a result, prices are going up. In fact, after a sluggish start to the year, Hawaiian home prices spent the entire second half of 2012 rising.
Just how far did they rise?
By the end of 2012, the median sales price for a single-family home on Oahu was $640,000. Back at the end of 2011, it was $605,000. The median sales price for a condo on Oahu jumped $50,000 – from $285,000 to $335,000.
Builders couldn’t help but take notice of the increase in sales prices, so they pulled out their tools and got to work. So, expect to see an influx of new construction going up for sale as 2013 moves along. Apparently, an increase in demand was the exact kick-start builders needed!
That being said, though, realtors in Hawaii say that the time to buy is now. While they agree that the housing market goes in cycles, they agree that this pattern of low prices and low mortgage rates isn’t going to last forever – especially in a place like Hawaii, where the standard is much higher than the mainland.
But can Hawaiians withstand higher prices right now, as they continue to recover from the recession?
That remains to be seen. In addition to tourism, a big part of Hawaii’s economy is defense. With the recent death of Senator Daniel K. Inouye, it’s unclear who will fight for Hawaiians’ slice of the federal budget pie in Washington.
And, Hawaii’s economy isn’t just dependent on what happens in the U.S. Because of its proximity to Asia, it relies heavily on China’s and Japan’s economies, too.
What about renting? Is that a better alternative?
Apartments for rent in Hawaii will cost you a pretty penny! Like most of the rest of the country, landlords here have capitalized on people’s fears over buying. As a result, a one-bedroom apartment in Honolulu will cost you, on average, $1,446 per month. If you need some extra space, plan on paying for it. Two-bedroom apartments for rent in Hawaii cost, on average, $1,997 per month!
At those rates, 2013 just might be the perfect time to say “Aloha” to a new home!