First, the wild frenzy of home buyers, especially those with all cash, bidding up the prices of real estate no longer exists.  In 2020 and 2021, this made it very difficult for those with financing to get their offers accepted.  Even though housing supply is still low, buyers have more bargaining power and much higher success rates in getting offers accepted. If you are financing your home purchase, particularly with low or no down payment financing (such as VA), now is a great time to be able to shop around for the right home, negotiate seller credits and have a reasonable chance at offer acceptance. 

Second, home values are projected to continue to appreciate as a result of the shortage of available inventory in Hawaii and higher demand fueled by Millennials entering their prime home buying years.  The ongoing upward pressure on home values means waiting for the interest rates to drop may leave you paying higher prices in the future, offsetting some of the benefits of lower rates.  

Third, a fixed-rate mortgage provides payment stability.  As long as you can find a home where the payment is comfortable for you now, if the rates do drop in the future, you can simply refinance to a lower fixed rate mortgage and a substantially lower payment at that time.  Since you already own the home, the appreciation in home prices is a benefit to you and not a hinderance. 

Fourth, there are temporary buydown programs available for many home buyers that reduce the monthly payment substantially over the first 1-3 years of the loan term.  It is basically a subsidy paid for by the seller as a closing cost credit that reduces your payment until the temp buydown period ends after 1-3 years.  If the interest rates decline in the next few years, you can refinance to a lower fixed rate hopefully before your payment returns to the full payment amount at the end of the temp buydown period.  The worst case is you start paying the interest rate you initially qualified for once the temporary buydown period ends.  The 2/1 temporary buydown is the most popular and you can learn more about it HERE. 

In summary, even with interest rates higher now than in recent years, there are several positive factors to consider if you are considering if now is the right time to purchase real estate in Hawaii.  There are less buyers in the market giving you better negotiating power, home values continue appreciating, a fixed-rate mortgage provides payment stability, and temporary buydown options can help offset the initial payment for the first several years of your loan term.  The decision to buy a house depends on your own financial situation and goals.  However, from an interest rate perspective, now can still be an excellent time to become a homeowner.