Maui Homes Guide - Chapter 6 - The Housing Market and What Affects It

Assuming you have already read Chapter 5 - Choosing A Realtor, it is time to focus on the housing market for your preferred communities. Markets shift from favoring sellers to offering more options for buyers. Your Realtor should be supporting you by keeping a watchful eye on the market, surveying neighborhoods, and contacting you when they uncover opportunities that fit your predetermined criteria.

There is no need to obsess about timing the market; it is not so specific a science t

• The past market value of the home you are interested in buying.
• How much house your budget can get you in various neighborhoods and communities
• Home value fluctuation on the street, neighborhood, and town
• Potential property increases over time and price reductions that may be available.

That you can pinpoint a precise moment to make your move. However, you should stay well-informed and ensure your agent routinely monitors the following:

Just because you get a great deal on a home does not mean that you will realize huge profits when it is time to sell. The housing market will continue to fluctuate, and as with most any investment, you must embrace the fact that variations will occur. Again, do not obsess with timing the market; frustration will be your only reward.

Remember that any improvements you make to your home will increase its overall value. Just do not spend so much that the return on investment becomes unrealistic for the neighborhood. Creating a home improvement budget and including an ROI for each significant project will give you peace of mind as the investment matures. Most importantly, ensure that intrinsic value is present, and enjoy the enhancement you make.

Making the Most of Your Housing Market

While you and your Realtor are watching the housing market, there are other factors to check on as well:

• National interest rates for mortgages
• Building rates in your area
• Number of foreclosures in your community
• Stock market and gasoline prices

National Interest Rates for Mortgages

Even though the housing market may be going your way, interest rates will not follow in step. Frequently when housing prices slump, interest rates rise to retain a natural economic balance.

The interest rate you receive is dependent on multiple factors, including:

• Other loans
• Current credit score
• Credit history
• Number of credit cards
• Annual income
• Current interest rates
• Type of lender
• Adjustable or fixed-rate mortgage criteria

When you see housing prices dropping, you may opt to buy a larger home than you would have if the costs had been higher. While you will be saving money on that end, you may be paying more each month due to higher interest rates. 

Building Rates in Your Area

If you notice your housing market has also caused new homes to decrease, you may succumb to a bidding war to secure your desired home. When new home construction heads downward, it can mean several things:

• The area has fallen out of favor.
• The interest in buying a new home has diminished.
• People can no longer afford to purchase new homes.
• Buyers are opting for older homes that are less expensive but may require more work.

While that housing slump may bring a reduction in prices, you should consider making a bid soon after finding the home of your dreams, as bidding wars can only cost you more money.

Number of Foreclosures

When looking for a home, it is worth considering those under foreclosure. Banks holding titles want those off their books at current rates and return to their core businesses; they have little interest in acting as proprietors; setting the home up for auction, or advertising the house as a foreclosure in local newspapers and online. Foreclosures can often provide excellent value; work with your Realtor to explore these options.

Stock Market and Gasoline Prices

Whether or not you play the stock market or own a car, you should still pay attention to these areas because they will often dictate housing prices and the costs to heat and cool your home.

When the stock market is doing well, people will spend their money more freely, nudging housing prices higher. But when gasoline prices go up, the price for heating and cooling a house goes up too.

Societal impacts on the housing market can be significant and potentially long-lasting. When there are more homes available than buyers to purchase, a buyer's market is created. A seller's market occurs when more people want to buy homes than homes available for sale.

Ultimately, prepare yourself to make well-informed decisions after both you and your Realtor have collected and reviewed all available and relevant data. 

Anthony Freda | RS-74661 | Aloha Group Maui | Keller Williams Realty Maui

MauiHomesGuide.com | 808-990-2961