Me (realtor): Congratulations on getting pre-approved for $550,000! Tell me your wishlist.
Buyer: We’d like 3 bedrooms (minimum), a 2 car garage, 2 bathrooms or more, a yard, split level, no jalousie windows (we hate those), no popcorn ceilings, preferably ground level, no one above or below us, pet friendly (our sweet boy Bailey is a slobbery 50 lb pit bull mix), and no HOA fees.
Me: (thinking…how do I tell them this just doesn’t exist on Oahu and how many more realtors will they talk to before they believe me and if they do wind up believing me, will they be back or will some other agent have them sign a Buyer’s agreement which they will because they needed to hear it 3 times to believe it).
So, yeah. That’s pretty much what it means, but not really. For the buyers who know next to nothing about Oahu real estate, it’s my job to educate and inform them of how little land we have on our beautiful island. When supply and demand are in an inverse relationship, that affects pricing (economics 101). Face masks are currently super cheap because they’re everywhere and no one’s using them anymore (except here in Hawaii…grrr). Oahu real estate is expensive because only 6% of it is fee simple to begin with. Add to that agriculture land, leasehold land that can only be leased to those who are 50% Hawaiian, golf courses, hotels & resorts, commercial space, nature reserves, military land, or land that is simply undevelopable/uninhabitable and you’ve got a supply issue. And don’t even get me started on how difficult it is to get building permits while the state of Hawaii has the highest number of state employees per capita…but I shall pump my brakes and swerve back into my lane. I am a real estate agent. An opinionated, sometimes unapologetic real estate agent who might also be startled awake in the middle of the night by the opinions I’ve shared out loud. Perhaps that will make you, as a client, a little more compelled to work with me as I enthusiastically stand by and communicate what I believe in.
Inventory is low. Here’s a solid example and hopefully I don’t need to say much more. I have a buyer right now who qualifies for $550,000. They’ve lived here almost all their lives so they understand the scarcity. Their needs:
- 2 bedrooms
- 2 bathrooms (but they’ll settle for 1.5 baths. They have 2 boys and mom simply can’t share a bathroom with 3 men anymore)
- 2 parking stalls – MUST. None of this “But you can find parking on the street.” Yeah. Right.
- Preferred areas: Kaneohe, Kailua, Salt Lake in Honolulu, might go as far as Aiea, but probably not.
- Must be pet friendly. Pets are family! And they’re not willing to lie and say their pets are therapy animals.
In preparation for the weekend, I had my eyes on the MLS all week. It yielded 2 listings. TWO. That’s it. They went to see them. One was a little too small. They loved the other one and were ready to make an offer! The listing agent had 4 offers in hand before the weekend was over and offers were due by Tuesday at noon. She was expecting more and already had offers over the asking price. Prior listings in the building said “pet friendly,” but I verified with resident manager it is not – therapy animals only. Ugh!!!
Inventory is low. Do I need to go on? Okay. Here’s one more example. Economists like to say things like, “There is 1.5 months of remaining inventory.” Translation: if nothing else came on the market today, it would take 1.5 months for everything to sell. Anything less than 6 months is considered a seller’s market. Beyond 6 months shifts to a buyer’s market.
Inventory is low.
So what does this mean for you? If you have property to sell, it’s time. How does lack of inventory help you? It’s not only about timing the market and getting the most money for your property. After all, statistics show that real estate on Oahu only goes up over time. So yes, you can wait and probably still make more money in the long run, but as interest rates increase, the amount of buyers willing to jump in now, hard, and aggressively will be less. With inventory so low, you’ll have the choice of cherry picking the buyer who will close fast and easy and with a grateful, cooperative heart. As a buyer, you could wait until the market cools a little and hope prices will come down in this increasing interest rate environment, but the real question is, will you end up paying more anyway? Maybe you won’t have to bid up the price as much to beat out 19 other buyers, but you’ll pay a higher interest rate, higher payment, or will have to settle for less because the interest rate prices you out over the home price itself.
My bottom line will always be this, however: the most important timing is your own. If it’s time for you to let go of a property, do it now. If you want to own a property and you’re in position to do so, do it now. This chick in her mid-40s is finally starting to understand how fast the clock is ticking. Lack of land and inventory has always made Oahu, Hawaii different from other markets like California or Las Vegas. As a buyer, you just have to get in and most only wish they did it sooner and bought more. As a seller, you can’t look back. Real estate on Oahu only goes up, some years more than others, but over time, it just does.
I write this from a flight over the Pacific back from Seattle in early March. When the pilot announced after take off that the weather is 80 degrees in Honolulu with northeast tradewinds at 15 mph, how do you think most people on this fully packed (fully masked) flight reacted? People love Hawaii. Politics aside, there is much to love about it. Demand is high. It always has been. It always will be. And I suppose that while I’m obviously mad we’re still wearing masks while the rest of the country is not, I’d rather wear a mask living in Hawaii than no mask somewhere else and clearly I’m not the only one who feels this way.
Inventory is low.