For some young professionals, living at home is the smartest move toward owning one.
A few years ago, Jayna Wong’s college friends thought she was missing out when she chose to live at home with her parents. Many of them couldn’t wait to leave their proverbial nests and rent their own apartments.
But last year, Wong’s conservative move allowed her to tackle one of the most daunting financial challenges for a young adult: buying a first home. The 26-year-old nuclear engineer now resides in a one-bedroom condominium in Liliha, thanks in part to the money she saved while living with her parents.
“I never really thought about renting, because I didn’t want to pay someone else’s mortgage,” Wong says. “A lot of my friends rented places because they didn’t want to stay at home, but they weren’t able to save much. This was probably the best thing for me.”
It doesn’t take a nuclear engineer to pull off this home-buying feat. Nationally, 63 percent of entry-level buyers are under age 35, according to the 2000 National Association of Realtors’ Profile of Home Buyers and Sellers.
In Hawaii, young professionals are even more apt than their Mainland counterparts to move straight from their parents’ homes into their own. Omitting the customarily transitional stage of renting is due to cultural and economic factors, says Ricky Cassiday, research director for Prudential Locations. He reasons that local families — many of which are Asian — are less likely than Mainland families to urge young adults to move out on their own.
“It’s much bigger here, because we’re a less mobile society,” Cassiday says. “People don’t want to move out of Hawaii.”
A combination of Hawaii’s dismal rental market conditions and low mortgage rates provides extra incentive to buy instead of rent.
“The rental market tightened significantly in the past two years,” Cassiday says. “And when you begin to see your rental level approach or exceed payments you’d make for the monthly mortgage, you figure, ‘Why rent when you can own?’”
Guy Tamashiro, chairman of the Honolulu Board of Realtors, says his own company has seen its share of rental searches develop into home-buying forays. Depending on their employment, young professionals usually select condos and townhouses or Leeward single-family homes, where prices are somewhat lower, he says.
“I think it’s easier to buy now because interest rates are low,” Tamashiro says. “Basically anyone with a stable job could buy a home. Prices have been going up, but in terms of the last 12 years, they’re reasonable.”
But “reasonable” home prices in Hawaii still exceed national averages. That complicates an already difficult task for most young professionals. As of this story’s writing, the Honolulu Board of Realtors reports the median sale price for a Honolulu single family home at $320,000, double the nationwide median of $150,900. Honolulu’s median condo price of $157,000 also surpasses the national amount of $135,000.
Living at home enabled Debbie Ishii to make a down payment on a Hawaii Kai condo two years ago. Ishii resided with her parents until a year after earning her master’s degree.
“I was not a saver,” admits the 31-year-old human resources manager. “I had to start buckling down and watching what I spent, so I would have enough to put down. And the timing was good — it was a buyer’s market.”
Ishii asserts that buying a home can be a very accessible reality for many young professionals, even with Hawaii’s intimidating housing prices.
“You can obtain or purchase something reasonable if you keep your mind focused in terms of what your goal is,” she says. “Plan ahead, start saving early and check out your resources so you can plan appropriately.”
Do you like what you read? Subscribe to Hawaii Business Magazine »