I’ve had several people contact me recently saying, “I hear Oahu home sales are down! Are prices dropping? Find me a deal!” Headlines are tricky aren’t they? Click bait is all the rage. So sorry, but this is NOT what this means in the slightest. The state of the Oahu housing market is right in line with what’s going on all over the United States – low supply, high demand. For those who took an economics class in high school or college, what’s the one thing you remember? When supply is low and demand is high, prices only go up.
Are we in a bubble? Many sitting on the sidelines are doing the Dr. Evil pinky in the corner of the mouth with the snicker just waiting for prices to come crashing down. I can’t say I know for sure and I tread lightly with my answer to this question, but I had an epiphany yesterday while talking to my husband. We recalled the last crash of 2008 and discussed why that happened. Money was incredibly easy to borrow. Anyone could buy a home with little to no money down and stated income loans were kryptonite. You could basically say you make $10,000 a month with no documentation to prove it and the bank would say, “Booya! Go buy a house.” People were buying property like crazy and prices went up, up, up. Sounds similar to what we’re experiencing now, right? Yes and no. The difference now is supply is so low, buyers are having to compete to win. Who are the winners? Those with the most cash. So, whether you’re paying all cash or financing, even those who are financing are putting a significant amount of money down therefore, allowing for built in equity as soon as they get their keys. In 2008, many did 100% financing at inflated prices. They were so upside down on their homes, it was easy to walk away and let the bank foreclose.
Most people aren’t gonna walk away from a home with equity. Also, those who have stayed in the homes they purchased in 2008 have experienced an incredible run in the market. Maybe their homes are paid off? Maybe they’ve refinanced to 2.75% and have very affordable monthly mortgage payments. So, for those of you wishing, waiting, and snickering for deals in the near future, my hyper positive Pollyanna logic says you might be waiting for a while. And while there may be deals in the future, who’s to say that a deal 5 years from now wasn’t today’s highest price?
I’m not psychic and I can’t see into the future. I may wind of eating a big bowl of these very words. I don’t want to see a crash not just for my interests as a real estate agent, but for families, couples, people who are living the dream of owning real estate. But history is one of our best teachers and one thing’s been true for decades: real estate is cyclical. This market will shift. How and how much? We’ll see.