Today, we’re going to talk about Hawaii real estate a question that I get asked almost every single day. WHY IS HAWAII SO DAMN EXPENSIVE?!
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I’ve been posting some videos of Hawaii real estate in certain price ranges and time to time I’ll get a lot of comments about what I could get in some other parts of the country. It's usually almost always TEXAS.
So when it comes to understanding Hawaii real estate, it really comes down to 2 things.
Supply and Demand
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Over time, Oahu’s inventory aka SUPPLY has dwindled down. Why is that?Well to put it simply, big surprise, we are an ISLAND….we are running out of space and more and more people every year are moving here. So what we can conclude from this graph is that as time goes on….we are basically running on LOW inventory or LOW SUPPLY…Remember that!
Next, here is a chart of the interest rates since about the 1970s. As you can see the, this also has dwindled lower and lower and lower….and I’m sure you are hearing in the news about interest rates being at an ALL TIME LOW….When interest rates are very low…that means people have more spending power and also allows for more buyers to be able to enter the market.
When these 2 things are happening….that mean there is more DEMAND in the market because there wouldn’t have been these many buyers had there been a higher interest rate AND buyers who were already in the market, are able to buy at a higher price point.
This is kinda why you always hear real estate agent say “IT’S ALWAYS GOOD TIME BUY” it’s a little different for everyone, but as long as you have a good interest rate it kinda is a good time to buy. especially since interest rates today are a lot lower than they were years ago.
This is a graph of all the BID UPS in Oahu. A "bid up" is basically when someone buys a home for more than the asking price…..This graph doesn’t mean that people are buying for 30% MORE than the price…..but more so 30% of the SALES on Oahu are bid ups. And as you can see, there’s these little spike in bid ups. and they tend to have a pattern…now this could be because of how the economy was at the time but you can see that there is a pattern….remember that…!
The next graph is a graph of the median price of homes in Oahu over time, the top line is single family homes and the bottom is condos….as you can see this TOO has some sort of pattern that goes up and goes down…but just a little…..if you take these 2 graphs together….you’ll see that they correlate…This basically means that BID UPS is the driving force that pushes prices in Hawaii up…
And that’s basically why Hawaii real estate is so expensive. You have a low supply cuz we’re an island and more people are moving here….you have low interest rates which mean high demand….then because of that you, have people who are willing to bid up homes because they really want to buy….so eventually the bid ups drive up the prices…which drive up the market value…and overall making Hawaii real estate….a very expensive place to live!
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DISCLAIMER: These videos are for entertainment purposes only. This is not meant to be financial advice. Please always do your due diligence.
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