Homebuyers will be out visiting open houses this weekend for the first time in a month as Oahu emerges from another lockdown due to the COVID-19 pandemic.
Eager to take advantage of historic low interest rates, buyers hungry for single- family homes are facing tough competitive market conditions, including record- high prices, low inventory and multiple- offer situations.
Oahu single-family home prices climbed to a record- high median of $839,000 last month, 6.2% higher than August 2019, according to the latest statistics from the Honolulu Board of Realtors. Months of inventory, a key measure of how many months it would take for current inventory to sell given the current sales pace, plummeted 41.7% to just 2.1 months in August, the lowest level in years.
Isle condo prices and inventory, meanwhile, remain relatively flat. There was a slight uptick to 4.2 months of inventory last month. Some homebuyers are opting for houses instead of condos for more space and backyards. Also, international buying has been crippled by the pandemic and travel shutdown.
If you’re in the market for a new home, here are eight tips to help your home search in a pandemic:
1. Be patient: Don’t rush into a poor decision, get caught up emotionally trying to “win” a bidding war or feel inventory will be this low forever. It might take you just one offer to get a home, or it might take several. In real estate, just as in life, sometimes it’s just not meant to be, and you need to move on.
2. Open houses are open again: Open houses will be allowed starting this weekend under Mayor Kirk Caldwell’s latest order but are limited to just five people inside the property. This includes the agents, so in many cases where there is a listing agent and a buyer’s agent, sometimes only one group will be allowed. That means some visitors may have to wait in line. All visitors to open houses must be masked and adhere to social distancing guidelines.
3. Do your homework: “View” and study the home before stepping foot in the home to familiarize yourself. Check out the virtual tours, videos, photos that are often available. Ask your agent for feedback and information. Have them preview the home for you if you’re not comfortable being out yet. This will save you time and energy in the long run.
4. Communicate with your team: It’s critical to communicate openly and constantly with your team, including your agent and loan officer, to make your home-buying experience a success. Ask lots of questions. Provide them your thoughts and feedback. Make sure they provide you updates regularly along the way.
5. Use technology: Ask for virtual meetings over Zoom or Microsoft Teams to go over documents if you’re not comfortable with meeting in person or in-office. Sign documents electronically via programs like DocuSign. Look at virtual tours, which have become very good. Ask your agent to preview the home for you and take photos or videos using their smartphone.
6. Get pre-qualified: It’s more important now more than ever to get pre-screened and pre-qualified by a lender before launching your search. Most are offering private showings to pre-qualified buyers only. Also, in a competitive marketplace, it’s best to provide a pre-qualification or pre-approval letter with your offer to make your package more attractive to the seller. Also, banks and lenders are under heavy pressure with many of their loans and mortgages going into default. Thus, they are scrutinizing buyers more carefully for creditworthiness, including closely monitoring employment status and income changes.
7. Expect the unexpected: Many changes can happen because of COVID during the roughly 45 days in escrow that can result in delays or a failed transaction. Unfortunately, many in Hawaii are losing their jobs, being furloughed or having their work hours cut back. This would potentially affect financing and qualifications.
8. Stay safe: Most important, stay healthy and safe. Stay at home if you’re feeling ill. Drive separately from your agent. Wash and sanitize hands often. If possible, leave the keiki at home with loved ones when going out to view homes. Wear masks at all times. Try not to touch anything inside the home, and ask the agent for assistance in opening cabinets and closets.
The good news for buyers is that record-low rates of about 3% should stick around for a while. After the strong pent-up demand is met, inventory also might loosen up a bit as the hot market faces some head winds because of Hawaii’s battered economy. When relief programs like mortgage forbearance and the state moratorium on tenant evictions are lifted, some homeowners might decide or be forced to sell their properties, freeing up inventory and giving buyers more options.
Jaymes Song is a top-producing agent with Better Homes and Gardens Real Estate Advantage Realty in Kahala. He can be reached at 228-3332 or JaymesS@BetterHawaii.com.