I know, I know; a real estate agent telling you that now is the time to buy a house is like a used car salesman telling you that clunker you’re looking at is a great deal. But with the way the real estate market is trending, now might really be the perfect time to get that Hawaiian dream house you’ve been dreaming of!
What Makes Now a Good Time to Buy Property?
Purchasing property is a huge investment, and you want to make sure you’re making the right decision. When deciding whether to buy a house now or to wait a year or two—especially a lovely tropical retreat on the Big Island—there are two main things to consider:
Will home values be higher in a year?
Will mortgage rates be higher in a year?
Home Price Trends
Although it wasn’t a great year for just about anything else, 2020 was a wonderful year for home appreciation. According to industry reports, the average home value increased by a whopping 10%! While that number might be hard to sustain, there’s no indication that values will decline any time soon.
According to expert projections from entities like the Mortgage Bankers Association, Fannie Mae, Freddie Mac, and the National Association of Realtors, home prices are expected to continue to rise by 7.7% in 2021—a decent jump from the average 5.3%.
When you put that into a buying perspective, a house that’s listed for $700,000 today should go for about $753,000 a year from now. If you wait, you’re going to end up paying about $50,000 more for your dream Hawaiian home. Of course, the more expensive the home, the more you’re going to pay a year from now.
Mortgage Rate Trends
If you plan on borrowing to secure your Big Island dream home, you’ll also want to pay attention to mortgage rates.
During the pandemic, the economy took a pretty good hit. To encourage spending, interest rates famously reached an all-time low at around 2.5%. Today, in 2021, they’re still quite low, hovering at around 3%. Of course, that all could change as the economy starts to recover.
Most industry experts agree that interest rates will likely start to rise as the economy recovers. Freddie Mac estimates that mortgage rates will average about 3.4% by the fourth quarter of 2021, hitting around 3.8% by the end of 2022. The Mortgage Bankers Association has rates rising even higher, reaching around 3.9% by the end of this year!
For buyers, higher interest rates could mean hundreds, if not thousands, more on your monthly payments, depending on the total price of the home you want to buy. Over the life of your loan, you could be paying upwards of $100,000 more than you would if you bought now! Especially if you’re looking at investment opportunities, buying sooner rather than later could net you a fortune in the long-run.
Ready to Buy? Now’s the Time
If you’re even remotely considering purchasing property in Hawaii, now might be the time to pull the trigger. Mortgage rates are still low, and home prices are on the rise. Waiting even a year could cost you hundreds of thousands of dollars after all is said and done.
Although inventory has been scarce since the pandemic hit, there are still plenty of properties available on the Big Island. If you’re ready to finally get that tropical home you’ve been dreaming of, contact me to get started. I’d love to help you find your own little slice of paradise.
Aloha, and welcome to Hawaii.