Think The Housing Market in Hawai’i Is Overpriced? Think Again.
When Buying a Home, Thinking Long-term pays Long-term Dividends.
Text & Images: CENTURY 21 Hawaiian Style
Hawai’i hit a housing milestone in August of 2021 when its median home price finally surpassed $1 million, breaking a historic record. Currently, the median home price in Hawaii rests at $1,050,000, following three consecutive quarters of steady increase in sale prices and decline in both days-on-market and inventory availability.
Often touted as one of the most expensive places to live in North America, this new headline may be obscuring the hidden benefits that come with what’s often referred to as the cost of living in Paradise. Now, more than ever, investing in Hawaii real estate may equate to a huge payout in long-term dividends.
These are the top 3 reasons you shouldn’t let the price of paradise prevent you from considering a home in Hawaii:
- When You Buy A Home, You’re Building Wealth.
Whether you’re in the market for your first home or investing in a second property, purchasing a home is always considered an investment. As the popular saying goes, “why rent and pay someone else’s mortgage?” You may have heard this from your friend, co-worker, family member, or even financial advisor. If you haven’t taken them up on this advice yet, 2022 might be the year to act. Despite the new record median home price, home sales in the first quarter of 2022 are showing a slight plateau. 2021 ended with a modest 8.4% increase in median sales price for condominiums in Honolulu. This, following an increasingly tremendous year of record-breaking sales prices and shortest days-on-market statistics. With many Americans now bracing for a changing economy in 2022, the beginning quarters of the year may provide an opportunity for many to finally make the plunge. But don’t wait too long.
According to the research, there’s much wisdom to this saying. Studies show that the vast majority of Americans build wealth through home ownership. According to Harvard economist, Laurence J. Kotlikoff, owning a home is one of the top ways to build wealth, especially for moderate to high earners. The reasons are manifold, from building equity to federal and state asset-income tax benefits. The Honolulu Board of Realtors reported that homeowners in Hawaii gained an average of $180,000 in equity in 2021 alone.
In addition, owning provides the added benefit of insulating you from the more deleterious effects of inflation on the housing market. You can’t be susceptible to the risks that come with market fluctuations if you’re locked into a fixed-rate mortgage, for example.
2. You Can Make Passive Income.
When you own a home, not only are you simultaneously saving money in the long-term while building wealth, but you could also be generating passive income. Throughout 2021, we all heard about the multitude of new outlets for generating alternative streams of revenue. Despite these new outlets, rentals remain a tried-and-true source of stable, passive income. Renting out second properties in Hawaii have become more complicated over the past few years with the passing of new bills and regulations. However, you can still benefit from owning a second property in Hawaii. Luckily, CENTURY 21 Hawaiian Style has decades of experience in assisting homeowners navigate the ins-and-outs of home ownership. Whether you’re interested in purchasing, purchasing an investment property, or looking to sell an existing property, expect the very best in quality and guidance from start to finish.
3. Concerned About Price Increases? Consider The Data In Its Totality.
Many prospective homeowners fail to consider the big picture when making decisions. The numbers don’t lie: Hawaii properties have largely retained or increased in value over the past few decades. This trend is consistent with National reports. In a recent Zillow report, the value of a home in the United States increased by 19.6% in 2021, which means homeowners made an average of $52,667 just by committing to homeownership.
CoreLogic’s National statistics report that altogether, homeowners in the United States earned nearly $3.2 trillion in equity in 2021 alone.
Ironically, one of the factors that contributed to this homeownership boon was the increase in the cost of homeownership. It’s no secret that the market continues to bring home prices up and inventory down. Many experts predict that statistics from the first quarter of 2022 that this trend will continue. However, the reports themselves have yielded mixed results. January 2022 marked the lowest reported record of housing inventory in recent years, but that dwindling of inventory was swiftly offset by a sharp rise in the national median housing price in February. One thing is sure: the housing market in 2022 will likely remain highly competitive.
For some prospective homeowners (especially first-time buyers), the record-setting increases in the cost of homeownership was a deterrent. Experts warn that this shouldn’t deter first-time homebuyers from taking the plunge, and it certainly shouldn’t be the reason for withholding on investment. With the overall economic benefits of homeownership outweighing the increase in cost and demand, prospective homeowners should act sooner rather than later. As experts forecast that home value and equity earning trends will only continue well into 2022, those who have the resources to invest should start earning now to maximize their profits in 2022.
Navigating homeownership isn’t easy. Don’t go it alone! Our experts at CENTURY 21 Hawaiian Style have nearly 4 decades of experience helping prospective homeowners get the most out of their investment. If you’re looking for award-winning, expert guidance from start to finish, contact us today. We’re here to help!
Patrick & Takako McMillen (R)
CENTURY 21 Hawaiian Style