— Two decades or 20% of the 21st century has passed. Whether buying your first home, growing your investment portfolio, or selling a property that no longer meets your needs, ..have you reached all your real estate goals? – What are you going to accomplish during the remaining 80%?
Last month, I met a gentleman at an Open House who has been wanting to buy his first home in Hawaii and expressed disappointment that prices for Honolulu real estate did not sufficiently soften during 2019. He expected a recession in 2019 and was waiting for an opportunity to buy!? – Perhaps he simply missed the buying opportunity without realizing it?
Asked if he is now ready to buy, he responded: “I will wait until after the election uncertainty” – Heh? No kidding. What does that have to do with anything?
That’s about the best excuse I heard since Y2K when people were petrified that their refrigerator was going to freeze up at midnight on 12/31/1999. No pun intended.
Has there ever been a correlation between Hawaii’s real estate cycles and presidential elections? – Never. Just in case you are running out of excuses to delay, there will be more election uncertainty coming again in another four years.
“How long are you going to wait before you demand the best for yourself?” ~ Epictetus
Excuses Abound
That is true for buying a home, saving for retirement, following a regular sustainable work-out routine, and developing quality eating habits based on nutritional value.
Neither ‘knowing what to do’ nor saying ‘you’re going to do it’ is enough. A recent survey revealed 88% of people fail to achieve their New Year’s resolutions.
Not everyone is comfortable admitting the real reasons to procrastinate. And many don’t even recognize the true reasons themselves. However, most ‘smoke & mirror’ excuses simply hide the single biggest self-limiting emotion: FEAR.
See related article: Buying Hawaii Real Estate And The Three ‘Ps’ That Are Holding You Back
Take Action
According to John Assaraf: “If you want to make 2020 your best year yet, start by breaking down goal achievement into 3 parts.
- Clarity and vision for what you want. (3% of the goal achievement pie)
- Having a plan with strategies and tactics then reviewing and tracking your progress. (17%)
- Taking action toward your goal, being mindful of what gets in the way (i.e., fear and emotions), and seeing obstacles as opportunities for growth. (80%)”
We won’t predict election outcomes, but we are convinced that it will do diddly squat to lower real estate prices. Whenever you are ready, whether buying or selling real estate, we are here to assist.
Where Are We Today?
During his November 2019 testimony before Congress, Fed Chairman Jerome Powell explained:
“Economic growth is stable and inflation remains under control. There is a lot to like about this rare place of the 11th year of expansion and we are certainly committed to extending it. There is no reason why this expansion can’t continue and a lot of value in continuing it. The new normal is lower interest rates, lower inflation, and lower growth.”
Unemployment is near record lows. Income growth is steady. Inflation is shy of 2%. The odds for a 2020 recession are now lower than during 2019. And, the Saturday before Christmas turned out to be the largest US shopping day ever!
The S&P 500 finished 2019 with an astounding 30% gain, the best year since 2013. Almost unnoticed, the S&P surpassed a staggering 500% of total gains during the last 11-year long expansion with 314 new record highs. The MSCI World Index reached its second-highest annual return, trailing only 2009’s initial surge.
If you are into analyzing financial and economic data, I recommend reading Jeff Miller’s brilliant weekly articles. His most recent 1.5.2020 post is here.
Meanwhile, in Hawaii, unemployment remains near record lows, and tourism is poised to set a new record in 2019.
Against all doomsday predictions, there has been no economic collapse as a result of Bill 89, CO 19-18 Honolulu’s New Short-Term Rental Rules.
Six months after CO 19-18 was signed into law, real estate values have hardly budged. Last year we discussed here and here, that the net impact on Hawaii’s real estate prices will hardly show as a blip on the long-term chart.
See related article, last year’s outlook: Market update – Jan 2019
Here we analyze Oahu’s real estate resale numbers by comparing the year 2019 with the prior year 2018. To spot a new trend, one month of data would not be sufficient because the sample size is too small.
![2019 year-end Summary](https://www.hawaiiliving.com/blog/wp-content/uploads/2020/01/2019-year-end-summary.jpg)
![Closed Sales - SFH & Condos 1987-2019](https://www.hawaiiliving.com/blog/wp-content/uploads/2020/01/Closed-Sales.jpg)
![Median Oahu Sales Price - 1987-2019](https://www.hawaiiliving.com/blog/wp-content/uploads/2020/01/Median-Oahu-Sales-Price-through-2019.jpg)
“Don’t feel harmed—and you haven’t been.” ~ Marcus Aurelius.
The market owes us no apology and no explanations. The fact is, Hawaii real estate has never been affordable. And that is unlikely to change.
See related article: How To Buy Hawaii Real Estate When The Market Is So Expensive
The next time a friend, colleague, or neighbor suggests that Hawaii real estate can’t possibly remain this expensive after climbing for this long, remind them that ‘supply and demand’ have been the more reliable predictors of prices rather than hoping, wishing, election uncertainty, or anecdotal evidence.
See related article: 3 Things To Remember When Waiting For The Right Deal
“Boldness is the beginning of action. But fortune controls how it ends.” ~ Democritus
Regardless how much information we try to process in order to make the right deciscions in life, fortunes and opportunities are not always recognized until afterward.
![Cat at the computer](https://www.hawaiiliving.com/blog/wp-content/uploads/2020/01/Cat-in-front-of-computer.jpg)
Could We Possibly Be In The Midst Of A Fortunate Buying Opportunity?
Review the following 3-year chart for 30-year US mortgage rates between 1.1.2017 through 1.2.2020. Are current interest rates some of the best we have seen during the last three years?
![30-year fixed - US mortgage rates 2017 through 2019](https://www.hawaiiliving.com/blog/wp-content/uploads/2020/01/30-year-fixed-US-mortgage-rates.jpg)
2020 – New Increased Loan Limits
In case you missed it, Fannie Mae & Freddie Mac’s conforming conventional mortgage loan limits for Honolulu County increased effective 1.1.2020:
- $765,600 single unit limit
- $980,325 two-unit limit
- $1,184,925 three-unit limit
- $1,472,550 four-unit limit
2020 FHA loan limits also increased, and VA loan limits have been eliminated.
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Hoping and waiting will not make Hawaii real estate more affordable. Even if you have a crystal ball that can accurately predict an imminent economic recession, relative affordability might not improve to the degree for waiting to pay off.
I’m a big proponent of individual homeownership. And I’m also a fan of wealth creation through investing in real estate. The year 2020 is as opportune as any year to buy real estate.
I don’t just say that. I am committed to investing in more Hawaii real estate this year. Look for a future upcoming article about why and what I will be buying.
We don’t just write about this stuff. We do what we say. When you are ready to buy or sell, make contact. We are happy to assist.
Conclusion
Unless you live with your parents, you either rent, or you buy. Renting offers the flexibility of moving with short notice. But, if you are committed to living in Hawaii and you are still renting after 3 years or more than you are throwing some serious bucks out the window.
You can pay off your landlord’s home with little to show for, or you can buy and pay off your own home. But waiting for lower prices to buy and trying to time the market is a fool’s game.
Instead, consider that the best time to buy is when:
- you are ready to commit to living in the same neighborhood, and
- you found a suitable home that you can afford.
Whatever you do, make it a remarkable year 2020!
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Ready to buy or sell real estate? We are experts and here to help. Contact us today. ~ Mahalo & Aloha