The Market Shift

Hawaiʻi has experienced record-breaking sales figures in recent years and data from the Honolulu Board of Realtors shows the median cost for a home on Oʻahu remains well over $1,000,000.  The current median for a single-family home along the Waiʻanae Coast is $515,000.

Changes in the economy, including the rise in interest rates has begun a significant shift in the real estate market.  The market that regularly saw multiple offers and bidding wars is over for now and we are rapidly switching from a seller’s market to a buyer’s market. 

Although a buyer’s purchasing power has decreased because of the higher interest rates, there are several strategies that sellers and buyers can use to get a property sold.   The most popular of these strategies would be the “seller credit”.  The seller raises his price in order to give that money back to the buyer.  This credit can be used to pay down some of the buyers closing costs, which could include lowering the interest rate.   Those funds can also be used for any needed repairs to the property.  This strategy was commonly used prior to the pandemic and we are seeing it in use once again.

Lenders have limits to the amount the seller can credit a buyer, usually somewhere between 3% and 6%, and the property must appraise for the value of the purchase price including the credit.  However, this strategy can be an excellent path forward for a buyer who may not have any cash, but has sufficient credit and can utilize one of the zero down loan programs available for Waiʻanae properties.  The Seller also receives the full amount of the desired sale price creating a transaction where everyone can walk away happy.