Hawaii home-buyer's mortgage math

[Nords]

The tide is beginning to turn in the core of the Hawaii real estate market.

Two years ago a Hawaii realtor's attitude could best be expressed by Lily Tomlin's Ernestine the Operator: "We don't care. We don't have to." The first Sunday open house would usually incite a bidding war if the place hadn't already sold on the Wednesday realtor's preview. Crowds of buyers rushed from one listing to another in a frenzy not seen since the Japanese land-rush of the late 1980s.

Today it's a bit different. This 3BR/2.5BA listing (Hawaii Real Estate Central - Honolulu Board of REALTORS) went on the market about six months ago at $710K. It's slipped through $690K to $645K and now it's showing vacant. The neighborhood is middle/upper-class in a great planned bedroom community between Schofield Army Barracks & Pearl Harbor including top-ranked schools within walking distance, easy highway access, and fantastic mountain views. 1600 sq ft homes and 6900 sq ft lots are bigger than the Central Oahu average and the home is less than 20 years old. It's in good shape with no special features.

The scary interesting thing about this listing is that it marks the return of the open-house mortgage broker. The guy sat at the dining room table, equipped with the attached spreadsheet to show potential buyers just how easy it can be to make a $655K purchase (since reduced to $645K). Hawaii land is so expensive that jumbo mortgages don't kick in until $625K so this is a range of "regular" mortgage payments between $3800-$3125/month. Can't handle the mortgage math or comprehend the fine-print disclaimers? No problem, he'd give you quite an education!

Apparently the five-year interest-only ARM is not yet dead...

Don't rush in. It may be even cheaper in a few more months.