Fiscal uncertainty impacts Hawaii real estate
Time is ticking for the Senate and House to come to an agreement and avoid a deadline that would kick in tax hikes for virtually every worker.
If Congress does drive the economy over the "fiscal cliff", it will have a negative effect on our housing economy.
Those in the local real estate industry are hoping for the best, while expecting the worst.
On Sunday, the President was putting the pressure on congress to make a fiscal deal...
"We should go ahead and introduce legislation that would make sure middle class taxes stay where they are and there should be an up or down vote," said the President during an interview on "Meet the Press."
Those in the real estate industry are biting their nails along with the rest of the nation, knowing a cliff dive will hurt the housing market.
If Congress decides to take away incentives, particularly the mortgage interest deduction, real estate experts said we may see a slowdown in Hawaii's housing industry.
"In Hawaii, with price points a little higher than the rest of the country, the mortgage interest deduction is important for a lot of families. That money they save on taxes is contributing to the affordability of the home," said Scott Higashi, vice president of Prudential Locations.
Hawaii has weathered the sluggish housing industry fairly well during the recession because of the lack of inventory here.
In fact, experts said the second half of 2012 may show a 7 to 8 percent increase in home sales compared to this time last year. But anytime consumer confidence is somehow affected, housing is affected.
"Where consumers don't feel confident about the economy, about their job, about their personal financial situation, that always has a broad effect on the real estate market, "said Higashi.
But the advice for buyers and homeowners: Don't panic.
"You'll be better off owning a home because of price appreciation," said Higashi. "In 10, 20 years, price appreciation will create equity and equity is really what your wealth is."
Fear of the end to the "Mortgage Debt Relief Act" that erases taxes on selling a home for less than what's owned to the bank is another provision that industry officials are worried about. But in Hawaii, short sales make up less than 25% of total home sales.
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