Five Compelling Reasons To Buy In Today’s Market
- Interest Rates Are Still Low, But Have Started Rising
Mortgage interest rates are still low—for now. A 30-year-fixed-rate loan now average around 4.25%, a full quarter percent over last month. Jumbo loans are still in a reverse situation with a lower average 4.00% interest rate, according to mortgage bankers at Wells Fargo. The current signs point to the Fed raising rates in September, with many economists believing we will see 5% rates next year.
- It’s A Buyer’s Market In Maui’s Luxury Segment
There is a noticeable bifurcation of the Market Place right around the $1,000,000 mark. Properties listed just under $1,000,000 sell quicker, those that over are slower to sell. This is due to a shortage of inventory in the lower ranges. In Kapalua and Kaanapali, the median days on market for condos is hovering around 180 days while homes are hovering around 150 days on the market. Absorption Rates (The number of months of homes on the market) are running well over a year for most upper-upscale and luxury condos and homes with some areas showing as high as five years of inventory.
- Home Prices Are Going Up
The median price of an existing home was $607,098 in May, a slight increase over May 2014 median prices. However, we are still at least 20% off the peak prices of 2006.1
“Attempting to buy a home when the market is at its lowest point—or to sell at the peak—is tricky,” said Jonathan Smoke, Chief Economist for realtor.com®, “You might get lucky one or two times, but overall, timing the market does not work,” Smoke added. “It all points to purchasing power, and that’s a reflection of price and interest rates, which will both be higher in the future.”
- Luxury And Upper Upscale Rentals Category On Maui Still Leads The State
The first quarter saw occupancy flat at a still impressive 74.5% in luxury properties with an ADR (Average Daily Room Rate) of $512.67, up 5.6% compared to the same quarter last year. Statewide the upper upscale hotel class continues to be the best performer with an 84.7% occupancy rate and an ADR of $254.38 per night.2
Christmas and New Years’ season 2014-2015 saw a bump in occupancy to 86.8% on Maui with average room rates in luxury properties up to $594.19, the highest in Hawaii and a 17.1% jump from the year before.3 The momentum is expected to continue throughout 2015 as record level of air seats become available with the bulk destined for neighbor islands of Maui and Hawaii.4
- Employment Continues To Rise
The U.S. economy is continuing to add jobs—about 280,000 new jobs in May with unemployment ticking up 0.1% to 5.5% as more Americans jumped into the labor pool looking for jobs as opposed to an increase of layoffs.5