The term “affordable” means different things for different people. Affordable housing in general simply means that no more than 30% of a person’s income should go towards housing. Housing payment would include the mortgage, principal, interest, mortgage insurance, taxes and homeowners insurance. That means that if a person makes $100,000 a year no more than $30,000 of that income should go towards these housing allowances.
However, just because it is affordable doesn’t mean that people stick with that. Many people go over the allotted 30% affordability ratio and many people stay far below it. Staying below it means it will be even more affordable as the homeowners will have more funds for savings, utilities and disposable income.
That being said, the average home price for Oahu is between $600,000 and $700,000. So, on average, for $600,000 home with a zero down deposit (which usually is not the case), including homeowners insurance, property tax and private mortgage insurance on a 30 year loan at 4% interest, the monthly payment would be roughly $3800 a month. This is about $46,000 a year, meaning the homeowner would need to have an income of about $150,000 per year.
Still, $3800 a month in mortgage payments can be quite spending. So let’s drop that in half. There are about 500 properties for sale on the island under $300,000. You can find simple one bedroom, one bath condominiums with 500 ft.² for around $109,000. Of course, options are also available, making an ideal purchase for investors or homebuyers that have cash.
Read more: How Much are Homes in Central Oahu
While condominiums are typically less expensive, at least the ones with the smaller square footages, single-family homes tend to run a little bit more. Houses typically start at about $200,000 for two and three bedroom homes of around 1000 ft.². Chances are many of these are going to need some cosmetic updates and maybe some repairs. Bring your elbow grease and trusty tools, but if you can snag a great fixer, you can usually increase your equity with a few home improvement projects. Move-in ready homes usually started about $250,000, but again, they would be small, typically around 700 ft.² to 1100 ft.².
Affordability in Oahu is slightly different than many places around the mainland but can be quite comparable to large metropolitan cities. However, nothing beats living in paradise and if you’re looking to move to the mainland starting with a 700 square-foot condominium might be the perfect starting point for you.