You've heard “Location, Location, Location”. That is the biggest determining factor for property values in Oahu. We are comprised of approximately 12 regions and each region has their own community with a wide value range in property. In Oahu, you could have a basic house built 40 years ago that would sell for $750,000 in some areas of O'Ahu.

But, put that same house on a hilltop with fantastic views and the home could become worth $1,750,000 or more. It is often times not the dwelling, but the location that will have the most bearing on the value. The price per square foot of dwellings varies in these different towns. In late Spring of 2004, the average price per square foot for a home for sale in Oahu was 8.

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While most places in the United States have experienced a housing boom that has led to a dramatic increase in property values over the past 2-3 years, Oahu has experienced an upward growth for over 7 years.

According to statistics of housing within Oahu , there has not been a loss in property values year over year for over 7 years. While housing remains fairly affordable in comparison to places like the Bay Area of California, Boston, Washington, DC and Southern California, prices have risen considerably in the last year. Over the past seven years, the value of homes has increased at a rate of 7% annually. Over the past ten years, the rate for vacant land has increased 30% annually. Move here for the beauty of the area, and buy your home for the potential earnings.

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Interest rates will affect the value of a home. In a market like Honolulu where the percentage of cash buyers is much higher, this can have less of an impact in retention of value in the face of the changing interest rates.

However, consider this: When interest rates are at 5% on a 30 year loan for $150,000, the buyer's payment is $805.24 a month. The monthly difference on an 11% loan is an additional $623.25 a month. How does this affect the value of a home? When interest rates are low, as they have been for a while, more people can afford the $150,000 home. That means more potential buyers. When there is more demand (buyers) than supply (homes), the price of the item goes up. When there is more supply(homes) than demand (buyers), the prices go down. The same holds true on a greater scale for homes. If interest rates go up, thereby eliminating potential buyers, a seller might have to drop the price of a home to have more potential buyers.

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