Market Update: Interest Rates Dropping in the Near Future?
It appears that the Federal Reserve’s fiscal tightening is finally taking hold. In order to combat inflation, the Federal Reserve has kept interest rates high over the past 2 years. It has been a battle, but it appears that inflation may be under control. The latest inflation numbers are coming in line closer to the Federal Reserve’s target inflation rate of 2%.
Impact on Real Estate Prices in Hawaii
The real estate prices in Hawaii seem to support that the Federal Reserve policies are having the desired effects.
Median Sales Prices: The median sales price for both homes and condos in May of 2024 declined compared to May of 2023.
• For single-family homes, the median sales price was $1,085,000, a 2.2% decrease year-over-year.
• For condos, the median sales price of $495,000 decreased by 2% year-over-year.
Increased Inventory:
• We see a significant increase in the inventory of active listings for both homes and condos.
• The inventory of single-family homes has increased by 17.9% year-over-year, while the inventory for condos has surged by 47.7% year-over-year.
• A significant increase in available properties will give buyers more options to choose from and dampen real estate prices.
What Should Buyers and Sellers Do Now?
Timing will ultimately be the determining factor.
FOR BUYERS:
• If a Buyer finds the perfect property today, it may be best for them to buy now and refinance if the interest rates drop.
• Buyers can also wait for interest rates to drop. But be cautious – when interest rates drop, prices tend to rise from the increased competition. Buyers may end up paying more for a home in the future than the Buyer could pay now for a similar home.
FOR SELLERS:
• Selling now or in the near future may not make that much of a difference, as prices are relatively stable for the time being.
• Consider your “Why?” for selling (e.g., upgrading your current property, selling your home to enter into a retirement community, selling to take advantage of tax benefits).
In the near future, the Federal Reserve may actually institute one or two interest rate decreases by the end of the year. This will provide some relief to those buyers who have been sitting on the sidelines waiting for interest rates to decrease before making a purchase.
Remember, timing matters and individual circumstances play a crucial role in real estate decisions. Whether you’re a Buyer or Seller, it is important to stay informed. If you need assistance with a property you own, please feel free to contact us to help you navigate these market dynamics effectively.
TEAM KIRIU
MARINERS
MILOIKI STREET
Listed at $3,200,000 (Representing Seller w/ Jessica Yuhara, RA)
