It’s no secret that the economy is in a very different place now than it was in 2021. Stocks have plummeted as much as 30-50% in some cases. People are starting to feel the pain, and real estate is no exception. I’ve been getting approached by more and more homeowners asking if they missed the opportunity of a lifetime (referring to the chance they had to sell their house in 2021, when homes and condos were so hot that you could sell your real estate for whatever you wanted within reason.. and often even outside of reason!).
Selling a house or condo in Hawaii in today’s market
The market for selling your property in Hawaii today is night and day difference from where it was just a few months ago. There are significantly less buyers in the market. Consequently, if you list your house on the market after a few weeks you might be lucky to get 1-2 serious buyers eager to buy your property if you price your home right. But you should not expect to have multiple buyers making competing offers right off the bat, and throwing caution to the wind by waiving their right to a home inspection.
Why it’s so hard to sell a condo in Hawaii right now
You should also be prepared for the challenges that may arise even after you’ve agreed to a sale with a buyer. Specifically I’m referring to the buyer’s ability to secure a mortgage to provide the cash funds needed for the purchase of your home. The reason this is more of a problem now is that monetary policy has tightened significantly. If you’re interested in understanding this principle more, there is plenty of information to be found on the web, so I won’t get into it. But I will say that tighter monetary policy means that money is harder to get, not to mention it’s much more expensive to borrow. This effects you because even if you have someone willing to buy your house for your full asking price right now, if they can’t pay in all cash, then they may have a much harder time being approved for a loan than they think.
There are still buyers that want to buy your house in Hawaii
Some of the buyers that didn’t find a condominium to buy during the hot market may still be looking now, albeit more casually. Hopefully those buyers spoke to a mortgage lender before shopping to find out how much they could qualify to borrow. But I would bet that a large percentage of that small pool of home buyers have not gone back to their lender to find out how much their max loan amount has decreased due to the drastic rise in interest rates for home loans recently. Most people think that the higher interest rates means that buying a house, condo or townhome in Hawaii is going to cause them to have a higher monthly payment. But that’s not necessarily true. What do I mean by this? Well if a buyer earns $10,000/mo gross income and has zero other debt (no car loans, credit card debt, personal loans, etc.), that buyer could typically be approved for a loan with a maximum monthly payment of about $4,400/mo, including all taxes, insurance, etc. About a year ago, that would have equated to about a $1,100,000 loan amount (and around a 1.35m max total purchase price assuming they’re putting around 20% down).
How mortgage rates effect the value of your home in Hawaii
The problem is that today, this exact same purchase described above would result in a monthly payment of about $7,300! This means that same buyer would now need to earn nearly $17,000/mo instead of $10,000/mo in order to qualify for the same loan amount today!
Unless that homebuyer got a huge raise (like a 70% raise!), their home buying budget just got reduced and they can now only afford a maximum loan amount of about $660,000!! That’s almost HALF of what they could have offered to pay for your house a year ago! This is because the going rate for a mortgage to purchase a house in Hawaii today is about 7% interest (and it is going to continue to increase for the foreseeable future).
Now it’s pretty unlikely that home prices will drop by 40-50%. That would be very bad for everyone. But according to this article from bankrate.com, experts are predicting that home values with drop by 10% in the next 2 months.
How much can you sell your Hawaii house for today?
I’m not saying this to scare you at all. I hope you understand that I’m only trying to share facts about the Hawaii real estate market today and some of the things I’ve learned from being a full time real estate professional. But if the buyer we just described was the only buyer interested in your house, that could mean that if you wanted to sell your house with a realtor listing it on the MLS you could potentially be forced to choose between dropping your price from $1,350,000 all the way down to just $800,000.. or just don’t sell your house.
So that’s the bad news.
But you can still sell your house in Hawaii…
It may sound like doom and gloom, but the reality is that there is not just one buyer out there. There are much less buyers today than there were a year ago, but if you price your house right, you may still find a buyer that has enough income that they can still qualify for the higher payment. Maybe they were going to buy a more expensive house, but now they’re willing to buy something smaller and cheaper since it’s all they can afford with today’s mortgage rates.
How can you sell your house in Hawaii for cash without a realtor?
Of course there is an alternative, and that’s where we come in. We buy houses in Hawaii for all cash so we are not as vulnerable to the rise in mortgage rates as most of buyers that a realtor would be able to find for you. If you’re interested in selling your house, condo, townhouse, or other property in Hawaii there has never been a better time to consider selling directly to a cash buyer like us. I recommend giving us a call just to see what we can offer. There’s no obligations, and we sincerely just want to help you. So if listing your house for sale with a realtor is the best option for you, we can help you make that choice. We’ll even help you find the best realtor for the type of property you are selling, since we know who many of the best realtors are in each neighborhood – and this makes a huge difference on whether or not your house sells!