Have We Hit Bottom?
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Have We Hit Bottom?

Any realtor with common sense will tell you we donÂ’t know when we are at the bottom of the market until it has passed us by.

It is a question asked almost every day. Have we hit bottom yet? Buyers want to determine if it is the right time to buy. Sellers want to determine if they should wait till prices rise. Any realtor with common sense will tell you we don’t know when we are at the bottom of the market until it has passed us by.

In 2007 the median home in Hawaii reached a record high of $640,000. Then after the Mortgage Crisis in 2008 prices dropped to $620,500, a 3% decline. In 2009 we felt the aftershocks of the crisis. Prices dropped again by 7.3% and the median sales price for a single family home was $575,000. This month, Hawaii Central MLS Ltd, released their end of year statistical report showing the median prices climbing back up to $592,750.

So have we hit bottom? There are some national signs i.e. the increase in manufacturing wholesale orders due to the anticipated demand for the sale of durable goods. Many are saying this is a good indicator a rise in single family home prices may be sustainable. Conservatively speaking over the next two year buyers and sellers will find themselves in a transition period relative to the price of homes. Low interest rates are probably a thing of the pass as the “I” word, inflation is being heard more and more. Inventory of homes here on the Island continues its downward trend. Interest rates up, inventory down, this initial phase still favors the buyer but sellers are waiting for the transition to tip in their favor with a vengeance.

Take note the Hawaiian economy is on the way back. The number one industry, tourism, is looking good. Hotel occupancy, visitor arrivals and tourist spending are up significantly, matching 2006-2007 levels. Unemployment rate have dropped back to acceptable levels (currently at 5.4%).

So does the 2 year dip in prices represent the bottom and if so what does it mean for buyers and sellers? Buyers relish the fact mortgage rates are still relatively low, below 5%. Borrowing money remains cheap. Sellers, decide if you want to sell now while inventory is low or wait until prices go higher.

The University of Hawaii Economic Research Organization is predicting the median sales price to rise by 22% and hit $718,000 in 2013. This gives those who bought during the 2 year down turn, an “At-a-Boy”! Sellers, well you know the drill. Your time is coming.

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