A matter of perspective

Originally, the plan for this article was to summarize the results of the current real estate market and highlight our view of the near-term future of Hawaii real estate. We will give a short synopsis of the Hawaii real estate market, but to start, we will focus on a drastically more important issue: the recent catastrophe that occurred on Maui. It is hard to believe that wildfi res could cause such traumatic loss of life and property. A hurricane, maybe, but no one would have predicted a wildfi re. The shocking speed at which the fi re spread left so many helpless when the fire came upon them. It is one of the most catastrophic fires in the history of the United States.

As the entire world knows, Maui is a very special place. It has a rare blend of natural beauty and numerous entertainment/shopping/ dining options. It is loved by both the permanent residents of the island and visitors. Truly, Maui No Ka ‘Oi. The people of Maui are extremely kind, but at the same time, they are strong and resilient. Although the damage left by this tragedy will not be resolved easily, the people of Hawaii will band together to ensure that the journey Maui takes to recovery will not be alone and will be supported by all. We are an island community, and we stick together and hold each other up through both good and bad times. It is amazing to see how quickly Maui residents aided those most affected by the fires. Continuous prayers go out to the people of Maui and to the first responders who are still working tirelessly to assist the people in need.

A quick overview of the Hawaii real estate market. The July 2023 median sales price for single-family homes ($1,090,000) is down slightly from July 2022 ($1,107,944) and unchanged for condominiums ($500,000 for July of both years). The number of closed sales has dropped off substantially for both single-family homes (-28.2%) and condominiums (-18.5%) in July on a year over year basis. We have a very interesting phenomenon. Many believed that the higher interest rates would have resulted in a much greater decline in median sales price than we have seen thus far, but the lack of inventory has kept the median sales price relatively constant for the time being. Homeowners locked in at low interest rates (some lower than 3%) are not likely to part with that interest rate and sell their homes. Therefore, even though today’s buyers cannot afford as much with the higher interest rates, the median sales price of homes has stayed relatively constant in July year over year due to a lack of inventory.

Where do we go from here? No one has a crystal ball, but if there is an upcoming recession, it will not be as deep as many experts originally anticipated. Due to the lack of inventory, it doesn’t appear that the median price for homes will drop much further even in this high interest rate environment unless there is some unforeseen occurrence (such as a spike in inflation resulting in more signifi cant interest rate increases by the Federal Reserve). Experts believe The Federal Reserve may still call for a couple of smaller interest rate increases (even though the inflation rate has slowed significantly), but the increases, if they occur, should not be anywhere near the rate increases of early 2023 and late 2022. Hopefully, in 2024, the Federal Reserve will start decreasing interest rates, the Japanese visitors will return to Hawaii and we will return to a more normal real estate market.

Keeping everything in perspective, Maui is foremost on everyone’s minds. The Hawaii real estate market will do what it will do. Doing what we can to assist the people of Maui is priority number one.

Myron Kiriu
realtor, Owner, CEO
BETTER HOMES AND GARDENS REAL ESTATE ADVANTAGE REALTY
CONTACT 808-864-9000
EMAIL myronk@betterhawaii.com
WEB myronkiriu.com