First timers see opportunity in condos

 

FIRST TIME HOMEBUYERS

PART 3 OF 3

Three-part series focusing on strategies for first-time buyers

 

HONOLULU ADVERTISER   April 22, 2007

 

BY LISA SCONTRAS

 

Custom Publishing Group

 

Despite half-million-dollar home prices, first-time homebuyers are not letting supersonic price growth keep them from jumping into today’s real estate market. By starting small and building equity, many have found that they too can own a piece of the pie.

 

 

“Condos are the perfect starter home,” says Susan Onishi Andrade, Realtor and partner at Prudential Locations LLC. “The fact that the median priced condo is around $300,000 — half that of a single-family home — appeals to first timers. And the fact they’re low maintenance appeals to empty nesters as well.”

 

Buying a condo is still an affordable way to own a piece of Hawaii real estate. In fourth quarter 2006, the Honolulu Board of Realtors shows the median sale price for condos Islandwide was $315,000. The median price is determined when exactly half the condos sold for more than $315,000 and half sold for less. In the Downtown-Nuuanu area, the median condo price was $315,500 last year. In Waikiki during the same period, the median condo cost $285,000.

 

Median prices were as low as $184,500 in Makaha-Nanakuli, and $191,500 in Wahiawa. In 2007, 110 units have already sold in Waikiki — with the median price at $265,500. Many first time buyers are considering condos in these areas as their get-a-foot-inthe- door purchase opportunity.

 

Experts suggest talking to a loan officer to find out how your rent payment might translate into a mortgage payment. With that information, it is easy to have a Realtor do an Island-wide search to see what’s available in your price range.

 

Andrade suggests you may not be able to swing your dream home the first time out but your goal to purchase is attainable.

 

“Be open-minded and willing to compromise on what you want versus what you can afford,” she says. “Consider your first purchase as a steppingstone home, and you will be headed in the right direction.”

 

The key is in confirming with a lender what you can afford. Not only will it keep you realistic, it is also motivating to know the bank will indeed lend you money if you can find a home you like.

 

“We would have liked to look at houses, but after getting pre-qualified we found that what we could afford to buy right now was a 2-bedroom, 1-bath apartment,” says a recent first-time purchaser, who bumped up his price range slightly after figuring in the estimated tax savings. “We even expanded the neighborhoods we considered.”

 

The universal appeal of condos on Oahu is catching on. Berton Hamamoto, president of the Honolulu Board of Realtors, points out that March statistics indicate condominiums are selling faster than in previous months. The average number of days on the market for a condo went from 59 days in February to only 40 in March — dropping by nearly three weeks — a good indicator of market strength in that category.

 

Other buying strategies for those looking to purchase their first property include the tried-and- true practices of partnering with your parents or taking on a renter. Renting out a room in a house is a nice way to offset the payments, but Andrade says the lender won’t normally use the rental income to help you qualify unless you are buying a multi- family unit.

 

One of the biggest mistakes would-be homeowners often make is thinking that prices appreciated to unrealistic levels and now they’re going to wait for them to come back down again. San Francisco condo prices — which are more than double what they are here, averaging in the mid $700,000s — make Hawaii prices look reasonable. Buyers in San Francisco have popularized, a buying strategy nicknamed “tenancy in common” — after a form of joint ownership. The strategy — commonly referred to in Hawaii as a “hui” — involves family or friends buying a property together just to get into the game.

 

Andrade says, “It’s not uncommon for multi-generational families to purchase a property together. They will combine funds, and qualify jointly allowing them to get into a larger single family home versus a smaller ‘starter’ home unit.”

 

Lastly, there are the first-time buyer seminars which not only take you step-by-step through the process, but also open doors to under-utilized low-interest loan programs and down-payment assistant programs.

 

“Renters should seriously consider taking advantage of these programs before they’re discontinued,” says Andrade. “It’s like free money.”

 

Don’t be scared off by the exorbitant price tags. It’s not necessary to overextend. Start small, get educated and take that first step. Find a great little condo and you’ll be on your way.

 

 

 

 

 

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