At the time, the seller’s income had not increased but the mortgage definitely did. The option of refinancing was off the table due to the fact that their current property appraisal value had not increased even though their mortgage payments have. Keep in mind that appraisal value is essentially linked to hundreds of homeowners in Hawaii, as well as thousands across the nation, going through the same situation either at the time or months prior. If none of this resonates with you I highly recommend watching "The Big Short,” a 2015 film by Adam McKay. 

During the mortgage crisis, people were significantly financially and emotionally affected by external circumstances that were out of their control. Now here we are, 13 years later, in 2020. We went from 2.7% unemployment rate in January (according to labor.hawaii.gov) to a whopping 23.8% in April (according to https://www.deptofnumbers.com/unemployment/hawaii/). The unemployment numbers alone show where we are as a state economically. And since our primary industry (tourism) is currently shut down, Hawaii’s economic future is quite unpredictable.

When you take into consideration all the statistics and current trends you’d be hard pressed not to be reminiscent of the 2007-2008 mortgage crisis. Interest may be at an all time low right now, but according to the Honolulu Board of Realtors, the number of condo sales and home sales have actually decreased since 2019. 

There are thousand of Hawaii homeowners who are currently dependent on the current forbearance plan and increased unemployment checks. Business and rental assistance are available too. But at some point these options will run dry and once again, we will see hundreds of homeowners looking to refinance at the same time. Most of whom will be doing so without a job, which will lead to mortgage defaults. Prolonged defaults will lead to late fees, penalties and short sales. Those short sales will then lead to lower appraisal prices affecting the next owner, and so on. Dèjá vu?

On a daily basis many friends, family, and clients ask me what I think is going to happen to the Hawaii real estate market. Starting here, I hope I am able to provide some valuable insight about our current economic situation and how it will affect our housing market in Hawaii. I am personally going to wait at least six months before I purchase another investment unit. Understandably, everyone has their own motivations and goals. In the meantime I wish the best, not just Hawaii, but the entire nation. Hoping we can rise again for the ashes, like we always have.

Written by Jacqueline Little