2014 – A great year for real estate! There will never be a better time to buy
The chief economist at Freddie Mac is projecting single-family home sales and starts to be at the highest level since 2007 in the coming year. The overall real estate market is normalizing, and the economy is continuing its recovery with an improving job market.
The inventory level for Maui homes has hovered around 640-650 for the last year, but condo inventory levels have dropped from 931 in December 2012 to 826 in December 2013. Distressed properties still exist in Hawaii but are not as plentiful as in prior years.
Prices in Maui have increased considerably over the last year; home prices are up 14 percent, and average condo prices are up 22 percent. For the entire State of Hawaii, prices overall have increased by 10.7 percent in 2013.
Prices are leveling off on a national level, and experts expect Hawaii’s price appreciation to be unsustainable in 2014. A normal appreciation rate is 3.6 percent. Overall projected growth over the next three years is 3.7 percent.
Interest rates (30-year fixed) for owner-occupied properties are around 4.25 percent now, but since the Fed has announced that it will begin tapering, experts are projecting rates to be 5 percent-plus by the fourth quarter of 2014.
For every percentage increase in interest rates, your purchasing power drops by 10 percent. If you have a mortgage in the amount of $250,000 and your mortgage rate increases from 4.3 to 5.3 percent, your monthly payment increases by $151.08.
Between rising prices and rising interest rates, there won’t be a better year than 2014 to purchase real estate – the earlier the better!