I’ve had a few investors from Canada call me up lately about an oceanfront property I may soon have available, asking if it’s a good time to buy Hawaii real estate. It’s a perfectly normal question, especially if you’re not on island. Investors want to know where to place their money, especially given the volatile nature of today’s stock market.
I basically have two responses to this question and it depends on:
- Who’s asking
- What’s the reason for buying
The first — is it an investor asking or a future homeowner? For the investor, I would say that now is truly a good time as there’s been a small uptick in prices and there are indications that prices might climb in the near future. There’s no guarantee, of course, but there are signs of health in the local economy and Hawaii housing markets. Of course, investors come in all shapes and sizes and it still has to meet one’s own criteria.
If it’s a homeowner, then it really depends on how the home fits into their overall financial landscape. In these situations, it often doesn’t matter how cheap Hawaii housing or credit is right now — some people are just better off not being saddled by a mortgage. Any honest real estate professional needs to be able to have this discussion and say the same thing. If you were scraping nickels to get by, it doesn’t matter how big a discount that new car is — you’re not buying it. Same idea.
The second — is this to 1) flip a house in Hawaii, 2) rent out for long-term cash flow and/or appreciation or 3) to be used as a primary residence?
If it’s to flip a house (learn how HERE), then I’m of the mind that it’s always a good time because there will always be opportunities to grab the sufficient equity to constitute a “deal”. In that case, it’s just a matter of selecting the deal after your due diligence. If the reason is for cash flow, then absolutely — if you can find the right property. It’s no secret that many cash flow investors in Hawaii do their shopping on the mainland in markets like Memphis, Indianapolis and more. But the long-term appreciation value of today’s Hawaii real estate market is very attractive if you plan to hold for at least 5 to 10 years. If it’s for your primary residence, then the answer lies beyond just your finances. If you’re ready and can afford it, then don’t try to time the market — buy a house. We’re low enough in any cycle that a long-term hold that you’d expect with a primary residence purpose seems like a sound investment if your other financial stars align.
Knowing when to buy Hawaii real estate (get on our list!) isn’t a decision to take lightly, but it doesn’t have to be rocket science either. There are a lot of “pickings” out there right now. If your timeline is right and your expectations are in alignment, then this may be the right time to make a wise purchase.
Mike