Why You Should Buy Your Hawaiian Vacation Home Today

Aloha! Past trends between the Hawaii and San Diego real estate markets reveal that Hawaii is a good buy today. If you have considered buying a vacation home in Hawaii before, now may be the time to do it!
My wife grew up on the Big Island in Kona. We travel back there twice a year frequently visiting some of the other islands. I often day dream of owning a house in San Diego and a house in Kona and having them both paid off when I retire (hoping for 20 years). During retirement, I’d go over to Hawaii for half the year and play my ukulele on my patio, read on the beach, and kayak to my favorite snorkel spot.
Now that the median sales price in San Diego County has jumped over 25 percent in the last year, it is safe to say that, for the time being, my family is unfortunately priced out of the San Diego market. I investigated the Kona real estate market trends and noticed that during the last price escalations in the early 2000s, the Kona real estate market lagged behind San Diego by over a year. While prices are escalating and the market is competitive in Kona today, prices are still relatively low. If history repeats itself and the economy continues to prosper, then I predict similar gains in Kona over the next three years as you have seen here in San Diego recently.
Maybe the prospective sales price increase isn’t enough to entice you, so consider that interest rates are still historically low, yet on the rise, and that many mortgage lenders offer a 10 percent down “vacation home loan”. These factors may enable you to better leverage your Hawaii home purchase while keeping your payments low. Please keep in mind that to qualify for a “vacation home loan”, the lender may only look at your extra income (income above your existing mortgage or rent and other expenses). This may limit your purchase power dramatically from what you can qualify for as your primary residence in San Diego County.
If you’re planning on renting out your newly purchased Hawaii home before your retire, then there are options for vacation rentals and/or renting to locals. Find a good real estate agent and property manager out there to help you choose the best options. Keep in mind that you may not be able to recover your full monthly costs especially for the first few years. Also, be aware that condominium home owner’s association dues (HOAs) can be very high in Hawaii and it is normal to have monthly HOAs in the $400 to $1,000 range.
While buying a Hawaii home comes with challenges, the upside is you’ll own a Hawaii home free and clear at the end of your loan term and have an opportunity most retirees only dream about. Mahalo!

Dave De Vries is the founder and principal of 1000s2u Real Estate and Planning Services. He also works as a principal planner in San Diego County and has over 12 years of planning experience. Dave has a B.A. in Urban Studies and Planning from U.C.S.D. and an honors M.B.A. with an emphasis in Real Estate from S.D.S.U. He is a licensed real estate broker and is certified by the American Institute of Certified Planners. Dave is a member of the American Planning Association and Toastmasters. More at www.1000s2u.com.

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