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Should I rent or buy a home on the island of Oahu, HI, considering the current real estate market and lifestyle costs?
The average person can afford a $250,000 home in Oahu with a 20% down payment and a monthly mortgage payment of $1,416...
but what if you don't plan to stay in the home for more than 5 years?
The answer lies in the 5-year rule, where if you plan to stay in the home for at least 5 years, buying a home can be a good financial decision.
The median rent for homes in Oahu is $2,650, with 384 active listings that stay on the market for an average of 57 days.
This means that finding the perfect home can be a challenge, especially in a competitive market like Oahu.
Did you know that mortgage rates are at an all-time low of 2.5-3.5%?
This is historically low, making it an excellent time to buy a home in Oahu.
(Source: Federal Reserve Economic Data)
Military members can purchase a home with 0% down through the Veterans Home Loan (VA).
This program provides a significant benefit to those who have served in the military.
The amount agents get paid is determined in a contract between the seller and the seller's agent.
This means that real estate agents can earn a significant commission on home sales.
The 5-year rule is based on the concept of "opportunity cost," which is the value of the next best alternative that is given up.
If you buy a home, you give up the opportunity to invest that money elsewhere (e.g., in stocks or bonds).
According to the United States Census Bureau, the median sales price of new single-family homes in Hawaii was $733,000 in 2022, while the median rent in Hawaii was $2,345 per month.
This means that buying a home in Oahu can be a lucrative investment, especially if you're willing to hold onto it for at least 5 years.
Real estate agents who subscribe to the Multiple Listing Service (MLS) can view all properties for sale on Oahu, listed by other real estate agents.
This means that having a real estate agent can be a valuable asset when searching for a home in Oahu.
The average American moves every 11.7 years, which is a testament to how often people change their housing situations.
However, if you plan to stay in Oahu for at least 5 years, buying a home might be a good financial decision.
According to the Federal Reserve, the median duration of ownership for a primary residence in the United States is 5-7 years.
This means that buying a home can be a good investment if you plan to hold onto it for at least 5-7 years.
There are daily, 30-60-90 day rentals, as well as 6-month to 1-year + rentals, available on the island-wide.
This means that renters have a variety of options when choosing a place to live in Oahu.
Hawaii has a unique real estate market, driven in part by the state's remote location and limited land availability.
This can drive up prices and make it more challenging to find affordable housing options.
Buying your Hawaii home makes more sense than renting when you are committed to living in the same home for a minimum of 5 years, assuming your rent is unusually affordable and you aggressively invest your saved cash with escape velocity to reach financial orbit.
Oahu's 35-year-over-over appreciation rate increases the chances of earning a profit from your home.
Another great option when you choose to move from your home is to keep it and rent it out.
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