Knowing what surprises the housing market has in store for us in 2009 is anybody’s guess. Will the economy begin to show signs of improvement next year or will sales continue to be sluggish?

While it’s true that Hawaii’s sales have slowed and inventory has edged up
causing prices to slip, it is equally true that mortgage rates are at historically
low levels and the very same increase in inventory that is frustrating sellers
has opened the door for many buyers.

For some — those who like to flip properties, for example — it is probably
wise to sit 2009 out. But if your family is expanding, shrinking or you’re
thinking of buying your very first home, you might do well taking advantage
of the lower interest rates and low prices 2009 may have to offer. Moving
into a large home, downsizing from an empty-nest or trading down to a more
affordable home are all realistic goals in this market. If you’re a renter, this is
a particularly good time to get out of the “rent rut” and finally make your
first purchase. Perhaps you’d like to start investing or, if you already own
investment property, maybe you’d like to upgrade it. There are bargains to be
found and low-interest mortgages available to finance them. If the time is
right for you, 2009 may be exactly the right market for you. Whatever your
plans are for the new year, an understanding of what drives the real estate
market to its peaks and valleys can empower both buyers and sellers.

WHERE WE’VE BEEN — 2008

According to Bill Chee, president and CEO at Prudential Locations, 2008 will
end with 27% fewer sales than a year ago, with overall median prices for
condominiums flat and single-family homes down 3.1%. “Fourth quarter
statistics will end with a record breaking decline in the number of sales primarily
caused by the loss of consumer confidence triggered by the historic turmoil
in the financial markets,” says Chee.

WHERE WE’RE GOING — 2009

Buyer confidence will be an influential factor in 2009 as well, causing prices to
decline an additional 6% to 10% by mid-year. Chee also foresees a decline
in the number of sales, down 25%. From neighborhood to neighborhood,
the market forces will likely vary, with some price declines exceeding 15%.
“The wild card emerging in the credit markets is the impact of lower interest
rates,” he says. Because of the struggling economy, the Federal government is
looking for ways to stabilize and stimulate the housing market and lowering
interest rates is one way to do that. Such a move would effectively
make homes more affordable and could infuse the housing market with
buyers. Similar plans to stem the tide of foreclosures could help the market
rebound further by helping people to refinance their current loans — possibly
avoiding foreclosure — as well as help others buy homes from distressed
sellers. Such loan products could have a tremendous impact on the Hawaii
market, making forecasted price reductions less drastic.

THE LOSERS

Certainly, everyone won’t win in this market. Developers with excess inventory
or in areas where housing supply is already abundant, such as parts of
Leeward Oahu, will have to adjust their products, pricing and/or terms to
attract buyers.
Those who purchased real estate in 2008 with hopes of reselling in 2009 will be disappointed. And anyone who is forced to sell, due to divorce or job change, and not repurchasing will have a more difficult time recovering any equity.

THE WINNERS

Buyers and investors may have an opportunity to take advantage of lower
prices and low interest rates. With a knowledgeable Realtor’s helping hand
and suitably armed with information about the neighborhood where you’re
shopping, you can make home ownership a reality or improve your investment
portfolio this year.

“Buyers will be fine in 2009,” says Chee. “Sellers will wish they’d sold in 2008.
Interest rates could benefit everyone.”

Continue Reading: First Time Homebuyers