Author Archives: Bryn Kaufman

About Bryn Kaufman

Principal Broker and Creator of OahuRE.com

2008 Home Crash All Over Again

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As pending home sales have dropped lower than the 2008 housing crash, it is an excellent time to revisit what happened in 2008, as it seems we are going there again.

In June 2007, the median Single Family Home price on Oahu was $685,000. It went down and did not recover to $685,000 until December 2013, so it took about 6.5 years to fully recover.

Some Realtors say it is Hawaii, and home prices will always increase. That is true if you wait long enough. If you bought at the median price in August 1990, you had to wait until August 2003 for the price to go up, so 13 years.

So what do I recommend?

If you live in your home and don’t have to sell, you don’t need to do anything. Just keep enjoying your home.

If you have to sell now, please don’t worry. You are selling for less but can also buy for less in your new location.

If you are currently renting, you might want to start following the Real Estate market as the prices are dropping and decide when the right time for you is to buy.

If possible, I do not recommend renting long-term. Prices will go up again, and having a home during the up times is a great way to accumulate equity.

First-Time Buyers At All-Time Low

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The percentage of sales for first-time buyers is at the lowest level they have ever seen, according to the National Association of Realtors.

High home prices combined with high mortgage rates are making it very difficult for first-time buyers, so it is not surprising they are being held back from making a purchase.

Most Sellers Do Not Realize Their Low-Interest Rate Loan Can Be Assumed.

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Approximately 23% of homes in the MLS have an assumable mortgage, but less than 1% of the homes for sale are marked that way.

This means most sellers do not realize their loan is assumable.

VA, FHA, and USDA loans are assumable by anyone, not just the military.

22% of all sales this year were VA loans, and 1% of sales were FHA or USDA loans.

So approximately 23% of all sales this year and most likely in previous years have an assumable mortgage.

On OahuRE.com, you can see the type of financing used when a home was sold by either mousing over the sold price in the comparison view as shown in the image or viewing the sold price on the property detail page using a mobile phone or desktop.

If you see VA, FHA, or USDA, you then know the loan can be assumed and can discuss that option with the seller, who probably was not aware of it.

As many of those assumable loans would be in the 2% to 4% interest rate range, it is a very attractive option right now to assume that loan.

8.5% Mortgage Rate Possibly Coming According to the National Association of Realtors

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Mortgage rates could climb another 1.5 percentage points, according to a leading economist.

National Association of Realtors chief economist Lawrence Yun predicted that interest rates could be on their way to 8.5 percent if they pass a threshold of 7 percent, according to Bloomberg. Yun based his forecast on key levels of resistance borrowing costs will face after a key inflation indicator hit a 40-year high.

After creeping toward 6 percent in recent months, the average rate for a 30-year fixed mortgage this week was just over 6.9 percent — a 20-year high — when Yun presented his findings at the National Association of Real Estate Investors in Atlanta.

“Today’s inflation rate report is going to test that 7 percent level,” Yun said in the presentation. “Once it’s broken, the next level of resistance is 8.5 percent, which would be another big shock to the housing market.”