I work with a lot of military buyers who are PCSing to Oahu. Normally, I counsel them that a real estate investment here is a great way to use their BAH during their tour. However, the real estate market here on Oahu in the spring of 2021 is a true seller's market and for that reason I have counseled some recent potential buyers away from buying a home because this may not be the right market for them. I think that it is important that potential buyers have the right information before they buy, especially in this type of market.
The current market is seeing prices increase as demand goes up and inventory across the island is extremely low. The result is that most homes in Honolulu and the Windward Side have between 10 to 15 offers while those on the Ewa side are seeing up to 30 offers. So what that does is it creates a bidding war and an increase in prices. This results in potential buyers possibly having to bring more money to the closing table as their offer price may exceed the appraisal price for their property. These higher prices would not be a problem if we could predict that the market would continue to increase during your tour. However, if the market flattens or goes down in the next two to three years and you want to sell your home when you PCS off island, you may have to pay out of pocket to close on your home.
Before you think about putting in an offer on a home right now, there are a couple of important questions to ask:
1) How long are your orders? If you have two to three year orders this may not be the right time for you to buy a home on Oahu.
2) What are your future plans for the home? If you are planning selling the home when you transfer, then this may not be the right time to stretch your budget on a home. However, if you plan on staying here when you leave the military, renting your home while you are gone, or otherwise making a longer term investment, then this seller's market may not have as much risk for you.
While I love to see as many military members as possible invest their BAH in a home, you need to talk to a realtor and look closely at your budget and future plans before jumping into this market. The last thing that I want to see is someone buying a home that they will lose on money on when they try to sell it in two to three years.
If you have questions on the current market in general or on a specific area and want to see if this is the right time for you to buy, please contact me and I would love to talk over your options with you.