Unfortunately, I am predicting that there will be short sales on the market within the next 1 to 2 years. I worked approximately 100 short sales for Buyers and Sellers during the recession for both military families and civilians using both VA loans in Hawaii and conventional loans in Hawaii.

What is a short sale? It is when the balance of your mortgage is greater than what you can sell your house for.

Over the past 2 years we have seen a dramatic increase in home prices including Ewa Beach and Kapolei. All of the neighborhoods of Ka Makana at Hoakalei, Kuapapa at Hoakalei, Kipuka at Hoakalei, Lei Pauku at Hoakalei and all of the Ewa by Gentry saw these great price increases.

My concern is mostly for military families in Hawaii who purchased their homes within the past 2 years and will need to leave Hawaii on PCS orders within the next 1 to 2 years. If these military families cannot sell their homes because either the market is flooded with listings or the prices have decreased to an amount below their mortgage balance, they may be forced into a short sale.

They still have the option of renting the house but lets look at some numbers which is what made me write this post in the first place. Lets say a military member purchased a home for $1,000,000 in 2021 using a 100% financed VA loan at 4% interest rate. The mortgage payment including principal, interest, taxes, insurance and HOA fee is approximately $5,000 to $5,200 per month. The average median price for a single family home in 2021 was around $1,000,000 so we can then assume that the home that the military member purchased was a 3 to 4 bedroom single family home with 1,700 SF of livng space, a 2 car garage and a lot size of around 5,000 SF. Hawaii Military Realty, Inc. manages rental properties in Ewa Beach and Kapolei so we know that a home such as this one will rent for somewhere between $3,600 and $4,000 per month depending on whether the house has solar electric panels, nicely upgraded, pet friendly or not and the rent covers items such as cable TV, internet, swimming pool and fitness center. The normal property management fee is 10% of the collected rent so if we aim for the high end and say the house can rent for $4,000 per month then the amount the owner will collect each month would be $3,600 or $1,400 less than what their mortgage payment is. This doesnt even include items such as the Owner having to pay Hawaii General Excise Tax (GET) of 4.712% or any repairs done to the property during the Tenants occupancy. Many military families cannot afford to come up with that deficit of $1,400 per month and this is why I believe short sales will be prevelant in the next 1 to 2 years.

For any military family that is in this predicament, feel free to reach out to Hawaii Military Realty, Inc. as we consider ourselves to be short sale experts and will help you to navigate through the process. With your help and dedication to getting the short sale completed, we can get your home sold and allow you to move on with your life.

I certainly hope that my prediction is not correct and that we may not see short sales but all signs are pointing toward them.