You may love the tropical weather, majestic views of the mountains and beaches, and Aloha Spirit, but still not be convinced that Hawaii is the right place to invest. Well, if these weren’t reasons enough, here are 5 reasons that you may want to consider purchasing Oahu Real Estate in 2018.
1. The high rate of appreciation. Currently, Oahu’s average annual appreciation rate for single family homes and condominiums is above 5% per year when you look at a span of the last 40 years. This means that if you were to purchase a property and hold onto it for 10 years your property value theoretically would have increased approximately 60% assuming a straight line average appreciation. We are currently nearing the top of the cycle and you can expect another year of approximately 5% appreciation for Oahu properties.
2. A high demand for property. Oahu is currently in a situation of having a perpetual housing shortage because we aren’t able to build enough homes to keep up with the population increase. Add to this the desirability of Oahu for second home buyers and investors and you have a formula for increasing prices in the long run.
3. The stable pricing due to limited supply. Oahu enjoys a stable trend of pricing due to our high demand and limited supply. When you compare the historical median housing prices to those of the mainland US or even the neighbor islands, we had a smaller decline in prices during the Great Recession and were able to bounce back to our current market highs.
4. The stable rental rates. The rental rates for Oahu tend to follow the trend in pricing. Given that prices have increased in the last 10 years, it is no surprise that our rental rates have doubled in the last 10 years. With a limited inventory of housing, it is also easier for an investor to expect lower vacancy rates.
5. Enjoy a tax write off in paradise. Ask your tax preparer what expenses are deductible for you to own investment property on Oahu. You might discover that aside from your typical maintenance and upkeep, a trip to visit your property for appropriate management purposes might be deductible as well.
