Hawaii Real Estate: Tailwinds or Headwinds?

You don’t have to be an aviator to appreciate the value of a tailwind. In aviation terms, tailwind is wind that pushes the tail of an aircraft, increasing its speed and helping it to go faster. Tailwind is the reason we travel faster from Hawaii to the mainland than we do when we come back home. You gotta love those tailwinds when you are mainland bound and in a hurry to start vacay. You gotta love “tailwinds” in business, too. In business, the term “tailwinds” refers to or describes a situation or condition that will move growth, revenues, or profits higher.

What are tailwinds in real estate?

The basic fundamentals for starters — low interest rates, a healthy economy, favorable tax laws, and a large demographic of people poised to buy. Hmmmm… we’ve clearly experienced some great “tailwinds” over the recent years. Tailwinds that have been fueled by historically low interest rates,  the ability to work remotely, and by the purchasing desires of the largest buying population on the planet — the millennials. In aviation, a tailwind causes speed to increase. Certainly, our real estate tailwinds have caused Hawaii’s housing demand and housing prices to increase.

Will prices continue to increase? Is Hawaii now facing headwinds?

From an aviation perspective, a headwind is wind pushing against the front of the aircraft which slows it down.  Planes flying west are always dealing with headwinds, which causes speed to decrease. In business, the term “headwinds” are those things that make growth harder. In real estate, the biggest headwind we are facing now is the increase in the mortgage interest rate. As you know, interest rates determine how much you will have to pay to borrow money to buy a property. Low interest rates tend to increase demand for property, driving up prices, while high interest rates generally do the opposite.

Of course, Hawaii and our real estate market and economy are facing other headwinds: rising inflation, the conflict in Ukraine, supply chain and water conservation issues, to name a few. All of these “headwinds” impact the real estate market, development and housing.

Will today’s current headwinds impact supply and demand? Prices?

And, if so, how and to what degree? The first quarter of 2022 revealed shrinking inventory, climbing prices, and faster sales. It appears that today’s headwinds haven’t completely eclipsed the tailwinds or slowed down the escalation of sales prices. At.least.not.yet.

Here’s a link for the full Oahu Q1 2022 Marketing Report.

Just as wind conditions affect your travel time, know that business and economic winds impact your timing when it comes to the decisions you make to buy and sell real estate. And, like a good pilot, even though you can’t change the direction of the wind, you can make adjustments for it. Yes, as the wind changes, you may have to make some adjustments in your decision-making and your timing, but you can still arrive safely to your destination with the right navigational tools and the right team. That’s where we come in — all real estate is local and every situation is unique. You’re unique and you need advice and strategies tailored just for you and your situation. Strategies that will help you to adjust for the headwinds and show you how to take advantage of the tailwinds. We aren’t aviation experts, but we are real estate experts.

One more thing: the tailwinds that have been driving the market aren’t just economic in nature. During the pandemic, people started evaluating their lives and their lifestyles. Post-pandemic, that same evaluation continues. The “wind” of living better, cleaner, simpler lives, surrounded by beauty, pushes people to move here, buy here and live here. That wind is still blowing. Strong.