Who is poised to win in real estate in 2019?
2018 turned out to be an interesting, if mixed, year for the O‘ahu real estate market as a whole. The 10,000-foot view of the market is that prices continued to slowly increase while total number of sales were down a few points and interest rates crept up as expected. Listing inventory increased significantly for both single-family homes and condos, and there were fewer listings sold for more than the asking price.
So what does it all mean? Personally, I believe these changes signal a return to a more “normal” market. Since 2013, we have seen a consistent trend of extremely low inventory, high buyer demand and steady price increases. These conditions created an exceedingly difficult—and often painful—market for would-be buyers. Demand for housing was dramatically higher than the available supply, which resulted in more bidding wars than we have seen in the history of the Hawai‘i market, particularly for single-family homes under $1 million and condos under $750,000. It was not uncommon for new listings to receive multiple offers immediately after being listed, with the winning offer oftentimes tens of thousands of dollars above the list price. And these market conditions persisted for five straight years.
Fast forward to today and the net effect of all these moving parts is that the pace of sales has slowed a bit, and there are more listings available now than there have been in at least the last five years. So who will benefit the most from these market conditions in the coming year?
Investors
Real estate investors will have more choices than they have had in years. With less competition in 2019, investors will be able to target specific markets and properties that may not have been available a year ago. Investors who use a 1031 exchange will have the opportunity to sell underperforming investment properties and upgrade to properties that are poised for greater appreciation or that will have better cash flow. Locations will be hosting 1031 exchange seminars throughout 2019, so please reach out to me if you’d like to learn more about how to build wealth using 1031 exchanges.
Homeowners
Homeowners who have owned their homes for at least a few years will have built up enough equity to trade up to a home that better meets their needs or changing lifestyles. Rising interest rates will be the biggest risk for both investors and move-up buyers.
Renters
As for renters who plan to remain in Hawai‘i for the foreseeable future, my advice is to become a homeowner as soon as they possibly can.
In summary, 2019 will provide many real estate opportunities for many people, and it is imperative to note that the real estate market behaves differently in every region and neighborhood on the island. An experienced REALTOR® can provide data and insights on each of O‘ahu’s many local markets to help you best position yourself.
