February saw another drop in home sales for the third month in a row, a statistic that is extremely uncharacteristic for this time of year. Often the spring brings about a home-buying boom across the United States, especially for first-time homebuyers.
Prices are rising contradictory to the fall in home sales, and one website decided to figure out how much your salary would have to be in order to afford a home.
Howmuch.net published an article entitled How Much Income You Need to Afford the Average Home in Every State in 2018.
Using data they collected from Zillow, a popular application used in buying and selling homes, they were able to find out the average price of a home in every state. They then compiled that data with a host of other variables and prerequisites such as minimum monthly mortgage principal, interest rate (depending on state and market), and a standard of 10% down payment. They also added the general rule, given as advice by many financial experts, of housing costs not exceeding 30% of your income.
They did the math, and it turns out that Hawaii takes the crown. The average cost of a home in Hawaii is $610,000, which the people at Howmuch.net then correlated to an income of $153,520.
That, however, is without factoring in the difference in islands.
According to a Hawaii News Now story, “…homes are pricier on Oahu then they are on, say, the Big Island. The median cost of a single-family home on Oahu is about $770,000.”
The findings make sense when you consider Hawaii’s popularity as a vacation hotspot. In just a five year span between 2010 and 2015, visitation to Hawaii increased at a rate of 4.3% each year. Television shows on popular housing networks have also boosted people’s desire to make the move. Although, it seems much more feasible on a TV screen than it might in reality.
While purchasing a house in Hawaii might seem like a far-off dream, especially after this study, it’s still possible.
The most important thing you should do, according to Hawaii Life, is to find out just how much you can afford. That means finding the right loan, and lender.
Getting a loan will depend on your needs and eligibility. Many first-time home-buyers opt for an FHA loan since the credit score prerequisite is fairly low. Plus, the higher the credit score the lower the down payment required. An FHA loan with a down payment of 3.5% (compared to the market standard of 10%) only requires the borrower to have a credit score of 580 or higher. A credit score of below 580 can still secure an FHA loan but at the normal 10% down payment.
A lender who knows the properties available and the types of loans needed is equally important. Finding a lender in Hawaii, or one on the mainland who is familiar with the Hawaii housing market is a good way to ensure you get the best offer available.
Another option is to invest in a condo that you can then rent out to vacationers.
While moving to Hawaii might be your dream, unless you have a sufficient income or can find a loan that works for you, it may stay a dream for a bit longer. The best option might be to wait until the housing market begins to pick up and more opportunities become available.