As news unfolds regarding COVID-19, we want to continue to provide you the best information so that you can make the right decisions for your real estate.
This information is intended to be received as insight and guidance on how to weather the storm through these uncertain times. Though we don’t have a crystal ball regarding how long this pandemic will last, we do know that action needs to be taken to clear the path for buyers of Oahu real estate in today’s market.
Our company assists clients across the entire spectrum of Oahu real estate, from entry level housing to luxury homes and estates. Each segment of the market is reacting differently to temporary closures of our economy. The recommended practices of non-essential travel, social distancing, and small group gatherings are having an effect on the housing market. Though not yet evidenced in the numbers, the shift is being felt by practitioners in the industry.
Oahu Luxury Market
For the luxury market of $2M and above, there will be a slower than normal season of sales because local buyers are likely concerned about the hit their retirement accounts just took and there will be less people coming to the island to view and enjoy properties. Being that many of our overseas clients are restricting their travel, they will not be able to come and visit Hawaii for their normal spring break. Typically when vacationing in the islands, our clients find the time to view properties, which they purchase as investments or second homes. As reviewed in our 2020 Market Forecast, the luxury market peaked in activity around 2017 and since then the market has been steady but softer than in years past. There was a slight pick-up in sales due to the lower interest rates in 2019 but the average price of luxury homes has not increased. If you are a buyer for a luxury home you’ll be seeing more attractive pricing as we go through the year. There are also opportunities in the current inventory of new luxury condominiums as well.
Oahu General Markets
For properties priced between $1M-$2M anticipate slower sales but a continuance of activity in desirable neighborhoods. When you get into the sub-$1M price range there will be a mix of buyers, some of whom are very sensitive to interest rate changes, and those who are driven by price and value. One of the most promising markets is that of the first-time buyer. With interest rates at all-time lows, first-time buyers are purchasing in the sub-$500,000 range and are taking advantage of the low rates. Generally speaking, current buyer demand is driven by local buyers needing housing and a small contingent of buyers who are moving their money from stocks into a more stable asset class such as real estate.
Forging a Path for Home Purchases
Homebuyers in the current market have a few significant obstacles to overcome. The following guidance is directed to both buyers and sellers on how to forge a path to home ownership. Here are the three challenges that a homebuyer faces in today’s market:
1) A reduction in property showings per the requirements of social distancing.
2) A loss in income and concern with financing.
3) The perception that it is not a good time to purchase real estate.
Our agents are able to assist in clearing a path for purchases, helping both buyers and sellers. The following are general strategies to help you reach your goal.
Obstacle #1: Showings and Social Distancing
Being able to preview and experience a property is a first step in deciding whether or not it is a good fit. If there is a concern about being exposed to COVID-19, or you are restricted from traveling, we provide buyers a virtual home viewing service, utilizing Facetime or other video apps. You can literally have a guided tour through a property without even being there.
There are precautions that you want to take when showing your home. With the concern of COVID-19 there may be instances where showings should be limited and possibly postponed depending upon whom you may have at risk in your household. If you decide to have showings it is a good idea to have a sanitation station at your front door so that prospective buyers have a chance to wipe their hands prior to walking through the home. Secondly, having some closet doors open and all the lights on will limit the amount of things that need to be touched for the viewing. Lastly, our agents will always be present at showings to coordinate the viewing and minimize risk to you and your household. At ChaneyBrooks Choice Advisors, we want to give you the advantage at this unprecedented time in the market and are providing a complimentary 3D Virtual Showing Service to all sellers who list their property with us. This 3D Virtual Showing Service is where we have our videographer create a 3D scan of your house along with a floorplan view, enabling a buyer to view your home without even stepping foot through the door. We are doing this free for all our clients who are selling because we feel it is necessary to give your property the most amount of exposure even if buyers might be physically restricted from seeing it during this time.
Obstacle #2: Certainty of Income & Financing
When there is a concern about the ongoing consistency of pay, it is critical to obtain a lock on your interest rate when it is within your qualifying range. With the ups and downs of the rate due to swings in the 10 year treasury purchases and MBS (mortgage backed securities), lock it in so that you are able to qualify for financing. We work with lenders who are vigilant with viewing rates and can notify you to take action when it is within your range.
As a seller it is important to know that the buyer you choose to work with will be able to obtain the financing they need to complete the purchase. Having a pre-approval is one thing, but then being able to have the assurance of a locked-in rate is another. With the volatility of mortgage rates and uncertainty of qualifying, you can negotiate on having a locked-in rate within a certain period of time from the acceptance of a contract to ensure that the buyer can obtain financing. Our agents are able to skilfully negotiate this into a contract and can also remain in close communication with the buyer’s lender to confirm that sufficient buyer reserves are still available and a verification of employment is received.
Obstacle #3: Negative Perception of the Market
Understanding the holding period of a property will help you as a buyer to manage your expectations on when to purchase. If you are purchasing a primary residence and will live in it for the next 5+ years, then it makes sense to purchase now while the rates are good and with some sellers eager to move. Our agents can help you to review historical resale activity within that neighborhood or building to gauge the ability of values to bounce back after a softening of prices. This way you can know if you are making a wise investment.
When a buyer is able to see things in hindsight, it makes any challenge less intimidating. This is where providing a long-term perspective is important when a buyer is contemplating a purchase of your property. Providing a 10 or 20 year chart on property values within your neighborhood or building along with the marketing collateral of your property will assure a buyer not only of your property’s charm, but also that they are making a good investment. Additionally, any improvements and upgrades which have been completed should be showcased up front so that the value of what they are purchasing is evident, and they feel comfortable knowing they won’t have to spend money on those things immediately after the purchase. Our agents will have this information up front when showcasing your property to assure the buyer of their purchase.
ChaneyBrooks Choice Advisors Commitment
At ChaneyBrooks Choice Advisors we are committed to forging a path for homeownership. Though we find ourselves in unprecedented times with regard to COVID-19 and the throws of the stock market, it is clear that home ownership is a stable means of weathering the storm while keeping a roof over your head. Our agents will provide you the expertise and tools necessary to overcome the obstacles that homebuyers face. Contact us today for a complimentary consultation where we can help you make the best choices with your real estate.