May 2026
The Hawaii Island real estate market is active. Homes are going into escrow. But look a little closer and a more complicated picture emerges.
Nearly every buyer I have encountered recently needs to sell their existing home before they can purchase a new one. Mortgage rates remain high. And the broader economic environment has made buyers cautious about committing to major financial decisions.
The Economic Context
Buyers’ hesitation right now is not irrational — it is a reasonable response to a uncertain environment. Two major forces are at work simultaneously.
The conflict in Iran and the closure of the Strait of Hormuz has caused what the International Energy Agency has characterized as the largest supply disruption in the history of the global oil market, with oil prices surging significantly and ongoing concerns about both energy and food security. For the Federal Reserve, sustained high oil prices create an impossible position — caught between inflation that pushes rates higher and pressure to bring rates down.
Layered on top of that is unpredictable federal trade and tariff policy that has added its own uncertainty to an already stressed economy. High mortgage rates have dampened the real estate market, while rising insurance premiums are eating into operating costs — and now surging energy prices are adding further pressure on consumers and businesses alike.
The result is a buyer pool that is active but cautious — and a market where creative thinking on both sides of a transaction is more valuable than ever.
Seller Credits for Point Buydowns
This is my preferred strategy in the current market for motivated sellers.
Instead of reducing the price, the seller offers a credit at closing that the buyer uses to reduce their mortgage interest rate.
Why I prefer this to a price reduction: A price reduction is permanent and shows up on every real estate website as a signal that something may be wrong with the property. A seller credit achieves a similar effect on the buyer’s monthly payment without the stigma — and without reducing the comparable sale price for your neighbors.
Why sellers should consider it: In a market where buyers are stretched, making the monthly payment more manageable may be the difference between a sale and a listing that sits. The net to the seller is modestly lower, but a transaction that closes is worth more than a perfect price that never materializes.
Owner or Seller Financing
For the right seller in the right situation, owner financing can result in a higher net than a traditional sale. Instead of taking a lump sum and reinvesting it at current rates, the seller becomes the bank — receiving monthly payments at an agreed interest rate, often more attractive than what savings accounts or CDs currently offer.
The downside is real and worth understanding clearly: if the buyer defaults, the seller must foreclose. Foreclosure in Hawaii is not fast, not cheap, and not simple. This is not a casual arrangement — it requires careful legal documentation and confidence in the buyer’s ability to perform.
As both a realtor and a licensed attorney I can help direct sellers to experts who can structure these transactions properly.
Contingent Offers With a Kick-Out Clause
A contingent offer means the buyer’s purchase depends on selling their existing home first. Many sellers are accepting these in the current market — which reflects how motivated sellers are to move forward.
The kick-out clause offers some protection: the seller accepts the contingent offer but retains the right to continue marketing. If another buyer comes along, the original buyer gets a short window — typically 72 hours — to remove the contingency or step aside.
The complexity in the current environment is that buyers counting on a specific net from their home sale are making assumptions about a market that is difficult to predict right now. Both buyers and sellers entering contingent transactions should go in with realistic expectations and a clear plan for what happens if the numbers don’t work out as anticipated.
The Price Reduction
A price reduction is the most visible tool available. It triggers immediate alerts on Zillow, Realtor.com, and every other real estate portal for everyone who has saved your listing.
I’m not a fan of price reductions as a first strategy — they are a one-way door and they set a new comparable for your neighborhood. But if a property has been sitting and visibility is the problem, a price reduction is effective at generating renewed attention quickly.
What’s Right for Your Situation
There is no universal answer. The right strategy depends on your timeline, your financial situation, your motivation to move, and what the property looks like relative to current market conditions.
What I can offer is an honest conversation about your realistic options — without sugarcoating and without the cheerleading that sometimes passes for real estate advice. If you are a buyer or seller in Waimea or North Hawaii feeling uncertain about your next move, reach out. This is exactly the kind of situation where having a realtor who is also a licensed attorney makes a meaningful difference.
Judy S. Howard, Esq. is a Realtor Broker with COMPASS in Waimea, Hawaii, and a licensed Hawaii attorney with over 30 years of experience. She can be reached at judy@livinginwaimea.com or 808-885-5588.