Have You Hit a Ceiling?

The real estate market on Oahu is intense. If you’ve been looking for a home, you know that it’s still very competitive. Multiple offers are alive and well. And, prices continue to escalate in most neighborhoods. Perhaps that is because there is no inventory to sell. Do you know that there are fewer than 100 homes on the market for under $1 million on Oahu?

So, with the increase in interest rates, limited inventory, and bullish home prices, does this mean you’re priced out of the market? Have you hit a ceiling on your ability to afford a home?

If You’re Concerned About Buying

If you are concerned about your ability to buy, the first step you need to take is to re-evaluate your position with your lender. How much more is an increase in your interest rate really going to cost you? For most buyers, it’s all about their monthly payment, so be sure to look at the actual numbers. Don’t let newspaper headlines deter you. Deal with the actual facts and figures. You might be happily surprised, but even if you aren’t, at least you’ll know your real purchasing power so you can make an informed decision.

Tips for Buying

There may be some strategies you can employ that will enable you to still buy. For example, you can obtain a lower interest rate by paying discount points, which will reduce the interest rate and your monthly payments. You might even be able to pay a little bit more for the property and ask the Seller to credit you back cash toward your interest rate buy-down. Increasing your credit score can also assure a better rate. If you have some additional cash, lowering your loan to value ratio may improve your interest rate, as well.

Talk to your Realtor. Your Realtor knows that there is a lot more that goes into your purchase than just interest rates. There are a lot of factors that play into your decision-making, including your basic need for housing, location, price, condition, lifestyle, potential for price appreciation, and even buying a home as a hedge against inflation. Bottom line — interest rates, though definitely impactful and important, are only part of the equation. There are just so many other factors for you to consider.

You May Need Some New Strategies

If higher rates and higher prices have caused you to hit a ceiling on your ability to purchase a home, you may need to consider some new strategies. Or, just maybe you need to find a new ceiling. Have you considered broadening your search parameters to different neighborhoods? Perhaps you can look at a townhome or condo instead of a single-family home? Maybe you can settle for a smaller home or a fixer-upper?

Rather than hit the ceiling, why not figure out a way to buy a ceiling (and the house that goes with it)? Yes, it’s competitive. And yes, the hike in interest rates does dampen your purchasing power. But, I bet if you employ some creative strategies with the right help from professionals, you’ll find a home. Maybe not your dream home, but a good home.

Stay in the Game

Buying may take a while given the dearth of inventory, but I encourage you to stay in the game. Interest rates are still historically low and spring and summer usually mean more inventory on the horizon. Market dynamics are fluid. Challenging.  I know it’s frustrating and not easy, but your dream of homeownership in Hawaii can come true, if you truly commit — commit to the process, to working with experienced professionals, and to making your dream a reality. No.Matter.What.