Rates spur buying
Real estate agents say a bump in
mortgage rates has hesitant buyers
getting in while the getting is good
Rising interest rates did little to dampen the enthusiasm of home buyers last month as more single-family homes were resold than ever before and condominium resales reached their highest level in more than 13 years.
The rise in interest rates to a six-week high of 6.14 percent had little effect on buyers and sellers but the increase could eventually lead to a cooling off of the market, said John Riggins of west Oahu real estate firm John Riggins Realty.
Riggins described the current flurry of sales as a "knee jerk reaction to rates going up.
"We already had a short supply of homes and people are panicked into buying because they're afraid rates will be higher if they wait longer. A month ago the rate was 4.75 percent, now nearly everyone is quoting over 6 percent," he said.
Dan Madden, broker-in-charge at East Oahu Realty, also attributes the recent homebuying activity to movement of those people who had been waiting for rates to drop even further and who have decided it's now or never.
"I think in the near term we'll see buyers who have been sitting on the fence and haven't bought now buying," he said.
But if rates continue to trend upward, the market will take a hit, Madden said.
"Then we'll see a slow down and a possible decline in prices," he said.
Riggins said he's heard the refinancing market has slowed with the increase in rates. "A number of lenders told me they've been seeing the re-finances dropping off," he said.
He noted the mainland resales market has already slowed and he predicts much the same reaction here.
"I think we can expect more houses to stay on the market longer. I also think we'll have a better selection," he said.
A slowing down of the market is probably a good thing in the long run, Riggins said.
"I think rising interest rates is a healthy sign. It will slow down the market and it will be a more stable market. People will also have time to think about it. Right now there is no logic and some of the prices are totally ridiculous. In a lot of cases greed has set in among sellers and that's not healthy," he said.
In the month just ended, single family homes sales rose 24 percent to 454 from a year ago while the median price of a home jumped 21.9 percent to $390,000 from $320,000 one year ago.
The condominium resale market, which had been slower to start moving when sale first began gaining momentum, rose 18.4 percent to 625 from 528 resales one year ago. It was the most sales since 769 condos changed hands in May 1990. The median price increased 11.5 percent to $175,000 from $157,000 buy dipped by 2.5 percent from June's median of $179,500.
