Why buy?

Blog Post Image
Real Estate

One thing I like about real estate: everyone needs a home. It is one of the most basic human needs. A home can be simply basic or luxuriously grand and everything imaginable between the two extremes. Homes are as diverse as people are and that makes it an interesting field to work in.

People who want to make their home here in Hawaii, in the land of highly-desirable real estate, may find buying the right island home a challenge. Frequently, I am contacted by an out-of-state buyer looking for the impossible: such as a three-bedroom home priced below $500,000 in Kailua. These are people who still have some research to do about local housing prices and I’m often the bearer of bad news, and we call “sticker shock.” Hello? Hello? Did they just drop the phone? Yes, the average priced home is now over a million dollars – yes, an average three bedroom home.

So, when is renting a better idea than buying? Let me think about that. I guess I’d have to go with, never, unless you’re able to live rent-free with your parents, which is probably not the best idea after a while. Now that post pandemic interest rates have increased, less people will find they are in a position to buy a home. That’s okay, with some planning, everyone can get there. Didn’t our parents teach us that the best things in life are worth working for?

There are several strategies used in high-priced Hawaii to get in on the housing market: 1. Start saving as young as possible (encourage young people to save). If kids learn to save for a video game or the latest thing kids want, they will get the idea that you have to save money for the things you really want in life. 2. Get a good job, income is one of the criteria lenders look at. Stability is another, so working several years in the same line of work looks good too. But don’t get stuck, if there’s a better job for you out there – take it.  3. Work your way up. Many people purchase a less expensive condo or townhouse first and then move up to a more expensive home later. I think it’s tragic when young people rent a fancy place and then will never buy because they can’t afford what they want to live in. Start small – at least you’re starting. 4. Pay your bills on time and do not overextend your spending. Get a credit card (to establish credit), but do not pile up a any credit card debt. Use the card and pay it off every month. You want to have a great credit score, so you qualify for the best loan programs. 5. When you think you might be ready to buy a home within the next year, consult with a lender and with a real estate agent. Agents tend to know the best lenders and a great lender will let you know if you are currently qualified for a home loan and can consult with you on your credit score.

So what’s wrong with renting? Perhaps you don’t want a long-term commitment. You just want to call the landlord if something needs fixing. However, you are also at the mercy of your landlord, whose plans for the property may change. Renting is a short-term solution to a long-term problem. If you only plan to live in Hawaii short-term (less than two or three years), renting might be your best option, especially if prices are not trending upward.

Overall, the costs of renting are very high. If your rent is $2,500/month – you’ve paid $150,000 in five years, if your rent is $3,500/month - then you've paid $210,000 in five years. Rent money goes down the drain and you’re left with nothing to show for it. Your mortgage could be similar to the rent you’re paying, but when you own your home you will experience a sense of privacy, stability and community that comes with a permanent address. It’s a place for you to share special moments and milestones in your own kitchen, lanai or backyard and if you want a pet, you no longer need to find a pet-friendly rental or approval from your landlord.

Are you waiting for the perfect, under priced home to fall into your lap? You could be in for a long wait and long-term disappointment if you are not ready to be realistic.

Why is it that there are always some people who take the leap to home ownership and others who stay on the sidelines? This has to do with one’s personal determination. If you are leaping into new and scary waters with a home purchase, good for you! The more determined you are, the greater your chance for success. A good real estate professional can be the key to making your dream come true. That’s why you’ll want to call me or have your family or friends call me. You know I’ll take good care of them or you through the process.

Home ownership doesn’t happen by accident. So if you want to make it happen, call me and I’ll help.