August Housing Stats

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More than 300 single-family homes and more than 500 condos sold in August, which is near pre-pandemic annual average closed sales per month for single-family homes and above average for condos. Median sales prices remained on pace with recent months, with August’s single-family home median sales price rising 7.2% year-over-year to $1,125,500 and the condo median sales price marking a nominal decline of 0.3% to $498,500.
 
“As market activity continues to slow with the rise in interest rates, it’s important for buyers to remember that homeownership is still possible,” said Chad Takesue, president of the Honolulu Board of REALTORS®. “More than 250 properties on O‘ahu, most of which were condos, sold for under $500,000 last month.”
 
While new listings fell 17.2% for single-family homes and 15.7% for condos, active inventory increased 43.3% for single-family homes and 12.9% for condos, though this lags behind pre-pandemic levels. A larger share of new listings remained active at the end of the month – 61% compared to 46% last August for single-family homes and 59% compared to 48% for condos – which is another indication of the cooling market. In both markets, properties that sold in August were on the market for a median of 13 days.

Homes Are Taking Longer to Sell

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The share of homes listed for 30 days or longer increased 12.5 percent in July compared to a year earlier, with 61.2 percent of homes now sitting on the market for a month or longer, according to a report released Tuesday by Redfin.

The annual increase in stale listings is the biggest since April 2020, when the housing market temporarily ground to a halt at the onset of the coronavirus pandemic. It’s also one of the largest year-over-year decreases since Redfin started tracking the data point in 2012, according to the report.

It Is A Buyer’s Market Now

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The days of bidding on homes with 20 other buyers are coming to an end.

Redfin said under 50% of their offers now have no competing offers, the lowest rate in 2 years.

They also stated that homes that would have had 20 showings two months ago are now getting one or even no showings.

Buyers are also canceling more frequently than any time on record other than the first 2 months of the pandemic.

Prices Up, Sale Volume Down

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“The rapid rise in interest rates is causing buyers to change tack and reevaluate their budgets and what they’re looking for in a home,” said Chad Takesue, president of the Honolulu Board of REALTORS®. “New listings are spending more time on the market compared to the frenzy in activity we witnessed last year. Sellers are also adjusting their strategies in response to market conditions. Over the past several months, we’re seeing more sellers decrease the asking price for their properties for single-family homes and condos,” Takesue added.

Cover of Real Producers

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Thanks to the 4 Realtors on my team, our 5 person Client Care Team, and all our past clients, I am on the cover of the July 2022 Real Producers.

I am also happy we saved 320 sellers $4,532,220 in Real Estate commissions using our $3,500 Flat Fee Selling option.

Thanks to Chris Wirsing and the Real Producers Team too.

https://www.oahure.com/pdf/Jul_2022_Honolulu_Real_Producers.pdf#page=28

Prices Do Not Always Go Up

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This chart shows two things well.

One is prices do not go up every year. After the sharp increase that peaked around 1991, you can see we went to 2003 before prices hit that 1991 price again, so over 10 years of prices not increasing.

Two is the current up trend is a lot steeper than it was back in 1991.

It will be interesting to see what happens next.

Purchasing/Buying Real Estate with: Solo 401k Real Estate | Real Estate 401k | Individual 401k | Self-Directed Solo 401k

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With a self-directed Solo 401k also known as “Solo 401k Real Estate”, the trustee of the self-directed Solo 401k can invest the 401k funds in many types of real estate investments (e.g., homes, commercial buildings, apartment buildings, land, mobile homes, etc.). All of these real-estate asset types may be held inside a solo 401k similar to stocks and mutual funds.

What is more, the Solo 401k rules permit the business owner to partner with his or her solo 401k when investing in real estate.  This type of arrangement is commonly referred to as tenancy-in-common ownership.

The rules also permit for loans to a Solo 401k by a third-party (not the solo 401k owner or certain family members of the solo 401k owner) for investing in real estate. This is knows a debt financing or non-recourse loan.  See definitions below.

The general steps required to make a real estate investment with Solo 401k are:

  1. Determine price range and whether or not your Solo 401k will need to engage in non-recourse financing or participate in a tenancy-in common transaction.
  2. Choose the investment property.
  3. If your Solo 401k will borrow money, find a lender and settle on the terms.
  4. Make an offer to the Seller.
  5. Have a third party (an attorney or Title Company) draw up the real estate purchase documents.
  6. Confirm the third-party understands that your are making the purchase through your Solo 401k and as such the Solo 401k will be listed as the purchaser/buyer.

You as trustee of your Solo 401k will safe keep the following forms and documents in connection with the purchase:

  • copy of the Purchase Contract
  • copy of the Settlement Agreement
  • copy of the Escrow Instructions
  • copy of the preliminary (un-recorded) Deed
  • copy of the loan documents (if your Solo 401k is getting a non-recourse loan)
  • You as trustee of you Solo 401k will sign and forward the documents to the escrow agent and write a check from its checking account for the purchase.

Lastly, the above procedure assumes that you went through a solo 401k Provider to open a solo 401k that allows you as the business owner to  serve as trustee of your own solo 401k investments instead of going through a custodian that has their own procedures and also safe keeps the real estate documents and as a result charges asset holding fees.

Definitions

Tenancy-in-Common Ownership: allows you to buy real estate with personal funds and Solo 401k funds. Each will own a specific percentage of the property. As a result, the income and expenses associated with the investment will be proportionally shared based on the ownership percentage. This type of arrangement also permits you to invest your Solo 401k with family members such as your spouse or siblings. Again, the key is to adequately reflect each investor’s percentage of ownership on the paperwork and that the expenses and income are proportionally shared by each party to the transaction.

Non-recourse loan: affords your Solo 401k the option to take a loan from a financial institution or an investor for purchasing real estate. If the loan is not paid back by your Solo 401k as promised, the lender may take the Solo 401k-owned property used to secure the debt, but may not take recourse against any other assets of your Solo 401k. Simply put, your Solo 401k-related loan can never affect any assets other than those used to secure the loan.

About Mark Nolan who wrote this post.

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>