Are you concerned about paying too much for a home? Do you want to know if home prices will come down in the not too distant future? Will prices stabilize?
Your guess is as good as mine, and frankly, your guess is probably as good as anyone else’s. Economists do their best to look at the data in order to give us a glimpse of the future. But, there is too much uncertainty to know where our economy will land when the dust settles, or, perhaps more aptly expressed, when the virus settles.
Real Estate Forecast
Carl Bonham, executive director of UHERO (University of Hawaii’s Economic Research Organization), addressed a group of Realtors at our recent regional meeting. Here are some of the cliff notes:
- Mortgage rates will rise over the next 2-3 years
- Home prices will continue to rise over the next two years
- 2022 will see an 8% growth in price appreciation
- 2023 will see a flattening in home prices
- Home prices will see a decline in 2024
According to Carl, our current market is not mirroring past bubble markets. Today’s dramatic increase in home prices is primarily being spurred by low inventory, and you guessed it, historically low mortgage interest rates. It doesn’t take a rocket scientist (or an economist) to figure that out. That being said, I have great respect for Dr. Bonham and I appreciate his acumen. His predictions are based on solid data and years of experience, and they align with what we’ve heard from others in his field. This.Isn’t.A.Bubble.
Consider These Factors
Dr. Bonham posed some really good questions worth considering. For example, If you are a landlord, will you choose to sell your property once you are no longer under the rental moratorium? Will you hold onto your property and raise the rent in order to recover some of your losses? There are currently 25,000 households in Hawaii behind on rent, so how will the end of the moratorium impact both tenants and property owners? What about short-term rental properties? Will owners who are no longer able to do short-term rentals due to the passage of recent legislation (Bill 89) decide to sell, thus freeing up more inventory? How will all of the answers to these questions impact you, your property value, and your future buying decisions?
These are good questions. Good questions without ready answers. If you want to know what the future holds for real estate, you’ll have to wait like the rest of us. Consumer behavior is just too hard to predict. Good economists like Dr. Carl Bonham can provide us a glimpse into the future, but the reality is that no one knows for sure which way the market is heading. There are just too many unknowns. What we do know is this: Inventory is tight. Interest rates are low. Demand is high. Today’s real estate market is robust. Very robust.
As for the rest of the story, only time will tell, but if Dr. Bonham’s predictions are correct, we won’t be seeing any flattening in prices for some time to come.