How Are Bank Collapses Effecting Maui Real Estate?

Anyone that’s seen the new this month has heard about the collapse of Silicon Valley Bank (also known as SVB), Signature Bank, as well as big trouble for some other huge banks like Credit Suisse, and many other regional banks being in very hot water. These events were terrifying for most who were following along during the chain of events. However the panic has subsided quit a bit now, thankfully. However we’re still not out of the woods, and there will certainly be consequences to the market and to many of us. In this article we’ll discuss what we see as potential effects that could spill over in to your personal life, and most notably into the market value of your Hawaii home condo or townhouse, whether you live on Maui, Oahu, Kauai or Big Island.

Will Maui Home Prices Fall Due to Banks Collapsing?

Bank Statement from Bank of Hawaii Real Estate Trust
Bank of Hawaii Statement

This is the question of biggest concern to us, and to many Hawaii homeowners. Will the value of your house on Maui fall due to the collapse of Silicon Valley Bank?

The short answer is that of course, no one really knows. But it is certainly feasible. It will all depend on how far the ripple effects reach. Personally, I see lenders tightening as being the biggest threat to Hawaii real estate. Another real estate investment company that we follow closely, Norada Real Estate, recently posted this article on the topic.

Due to the recent bank collapses, banks have been under more scrutiny than ever before. It’s highly likely that all of this micromanagement will cause most banks to be much more careful with how they invest depositors dollars. This includes services they provide, such as personal loans, lines of credit, and of course residential and commercial real estate mortgages. Costar is one of the biggest and most reputable sources for commercial real estate. They recently wrote this article explaining how the collapse of SVB will effect lending standards, which would ultimately effect Maui, and national, real estate values. Only time will tell how much they actually tighten up, but if they take it too far this could make it even harder for most people to qualify for and receive a new home loan to purchase a house in Hawaii. Naturally, this would lead to less demand, and ultimately prices decreasing.

Conditional loan approval for a home equity line of credit from first hawaiian bank
We recently received conditional approval for a HELOC, but the bank could still back out of the loan.

This tightening by the banks could be very bad timing, since mortgage rates have more than doubled over the last year due to the Federal Reserve tightening their monetary policy in an attempt to fight inflation. The Fed is much more concerned with keeping inflation under control, and they’ve made it clear that if their actions were to lead to a recession or to a housing market crash, that would just be collateral damage. Now to some people comments like that may seem absurd. But I do understand why they have such a stance. The reason is because if they allow inflation to soar we run the risk of suffering from hyperinflation, which would likely be completely catastrophic to our entire economy.

Conclusion – How Likely Are Hawaii Home Prices To Drop?

All of that being said, Hawaii real estate inventory is still very low which is the main reason why values have maintained their elevated levels. However I do think it’s possible for prices to drop even with the low inventory, if enough buyers are knocked out of the market.

Stay tuned to find out what happens next!

The Easiest Way To Sell Your House on Maui!

If you’re considering selling your home, condo or townhome on Maui, or anywhere in Hawaii call or text Maui Home Buyers today for a quick and easy, no obligation, all cash offer! We can make you a fair offer to buy your property completely as-is, you don’t have to pay any fees or commissions, and we can close the sale on your timeline. This is the fastest and easiest way to sell your Hawaii real estate with the least headaches, and for a fair price.

Get More Info On Options To Sell Your Home...

Selling your Hawaii property in today's market can be confusing. Connect with us or submit your info below and we'll help guide you through your options. Even if we are not the best solution for your needs, we're still happy to help refer you to someone else who might be, or just answer some questions for you.

Download Your FREE "Pros, Cons, and Pitfalls" Guide Below

Just put in your name and email, click "Submit" and we'll email you the Free Guide right away.
  • We never rent, sell, or share your info with anyone. It's not cool and we hate spam

  • This field is for validation purposes and should be left unchanged.

Leave a Reply

Your email address will not be published. Required fields are marked *