By Carla Olivo, PCSgrades Director of Strategic Communications
Will this be the year you stop renting and decide to purchase a home? It is truly one of the largest purchases you will ever make. However, buying a house when you know the military could move you at any time can be a gamble. Still, thousands of military families roll the dice each year and come out with an excellent investment. Purchasing, given the right circumstances, can be a great alternative to base housing or renting.
Moving to Hawaii – Hawaii Housing Market
One of the keys to making a smart choice for your family is knowing the local market. To look at the current Hawaii housing market, we turned to one of PCSgrades’ “A Graded” Realtors®, Mary
Is now a good time to buy?
There is a significant increase in homes for sale this year on Oahu. According to the Honolulu Board of Realtor, active single-family homes listed in 2018 were up more than 28%. Condominiums were up by 14%. “Buyers have a lot more choices when searching for their dream home,” says Standahl. “And mortgage rates are continuing to stay low.”
Is it a buyer’s market or a seller’s market?
2019 is expected to be a period of transition from a Seller’s Market to a Buyer’s Market on Oahu. “Some homes are still selling for top dollar, but they are sitting on the market much longer with average days on the market increasing,” says Standahl. This metric lets buyers and sellers know how competitive their market is and how long they should expect a home to be listed without accepting an offer. In November, the median days on the market for single-family homes was 28 days and 22 days for condominiums according to the Days on Market indicator.
STATUS OF INVENTORY
As of November of 2018, there were 3.1 months of inventory available for both single-family homes and condominiums on Oahu. This is a significant increase over the same period in 2017.
For the first week in January 2019:
- 347 homes went on the market
- 25 homes fell out of escrow and went back on
- 99 homes went under contract and are still allowing showings for backup offers
- 37 homes went under contract and are no longer allowing showings
- 113 properties were rented
- 141 were sold
- 13 were temporarily withdrawn
- 74 were withdrawn, 230 listings expired
- 17 listings had a price increase
- 164 had a price decrease
According to the Multiple Listing Service at the beginning of January, there were 3,426 total active listings on Oahu. There were also 865 single-family and condominiums available and open to offers from military members utilizing their VA loan benefit.
AFFORDABLE HOMES – MEDIAN SALE PRICES
Island living is unique, to say the least. All branches and ranks of the military are represented here in Hawaii. Having so many government workers helps to insulate the local economy. Sales of median single-family homes increased over five percent to $788,000 in December 2018 compared to December 2017. Condo sales decreased 1.6% to $398,500 over the same period.
Your BAH, although pretty healthy in the Aloha State, is up against escalating market prices. The average sales price for single-family homes increased 14% to $981,313 over the last year. The good news is the average sales price for condos decreased 5.7% to $450,252.
Another plus for buyers, the median days on the market increased to 30 days, up from 20 for single-family homes. Median days increased to 25 days, up from 18 days for condos.
Availability of New Construction
New Construction is not always the best option for military families expecting to live on the island for two or three years. However, there are several new construction projects underway on Oahu. Some include affordable housing units. Standahl says, “Each project has a different application process, qualifications, and financial deadlines so buyers should carefully review with a Buyer’s Agent if interested in new construction.”
She adds there is also good news for obtaining permits for construction. Pacific Business News reports legislation passed by the Honolulu City Council requires building permits to be issued by the city within 60 days of filing for one- and two-family homes. The expected result is a faster approval process for building permits.
Is it easy to resell in a few years?
Standahl says the housing market in Hawaii has historically been a great market to sell in a few years. However, she points out Realtors can’t guarantee how much money a buyer will make if they buy in 2019 and attempt to resell in a couple of years. “For military buyers, I recommend not buying above your means and having a plan to rent out your property if market conditions are not favorable.”
Advice for first-time buyers
First-time home buyers should start their search with a knowledgeable, experienced Realtor familiar with the special relocation needs of military families. In Hawaii, Oahu is a unique situation where most agents cover the whole island.
She says Realtors can preview homes for you, sending you video or even FaceTiming live while touring a property. Many first-time home buyers want to buy the “perfect” home and are shocked by the high prices in Hawaii. “My advice is to not look for your forever home but look for a home that can work for your needs now. Being in the military, keep in mind whether you plan to rent it out when you PCS or sell.”
VA home buyers should connect with a military specialist that knows the ins and outs of the VA loan and what types of properties will work for their needs.
Option for Renters
Given the high number of vacation rentals, there are not many annual rentals available on Oahu at any given time. In many states, Realtors are compensated for helping renters to find properties. In Hawaii, there is no commission from helping renters. Realtors in Hawaii only make a commission on buying or selling properties, so they can certainly help you find a place, but you will need to do the majority of the leg work.
Standahl recommends you come prepared with a list of references and your checkbook when looking at rentals because they go so quickly. “Be ready to sign a lease on the spot. Always read the lease document thoroughly and keep a copy for your records.” In January 2019, 875 rental listings were showing active in the MLS.
Lease bargaining power
If you’re renting just until you find the perfect property to buy, be sure to know how to terminate your lease. Clarify how you will get your security deposit back and what will be the process, i.e., a walk-through with the landlord to determine damage. “I recommend doing an initial walk-through with your landlord and have any existing damage documented up front. You may want to take video and pictures also to document the condition of the property.” In Hawaii, landlords can collect up to the same amount as your monthly rent. Plus, they can collect a pet deposit if necessary.
Parking is a premium in Hawaii! Even a lot of the luxury buildings do not come with two parking spaces. There are parking spaces in Waikiki that can cost upwards of $50,000. So ask about parking whenever you end up living.
A two or three-year tour in Hawaii is a dream job assignment for many. And while the cost of living is much higher than many other duty stations, with the right professional helping you, you can find an affordable, safe place to live. Aloha!
Carla Olivo has garnered numerous TV industry awards including the Associated Press award for Spot News Reporting, and Documentary Reporting. She lives in Northern Virginia with her husband, a retired USMC Lt. Colonel and their two children.Carla Olivo