If you think Honolulu’s home prices are sky high now and you’ve been waiting for home prices to ease before buying, that time might not come around for about three years. At that time, homebuyers will not only face higher prices, but rising interest rates that will further cut into affordability.

Despite a slow and steady rise in the past five years to record levels, Oahu home prices are forecast to climb some more. So how high can we go?

The median price for a single-family home is expected to reach $800,000 in three years before prices soften, according to projections in a new report by the University of Hawaii Economic Research Organization, or UHERO.

Single-family home prices are projected to finish this year at $731,300, 4.8 percent higher than last year. Prices are expected to increase an additional 4.8 percent to $766,600 in 2017 and then another 3.5 percent to $793,100 in 2018, according to UHERO’s County Forecast report.

Prices are predicted to reach $804,300 in 2019 before slipping to $799,000 in 2020, according to the forecast.

Meanwhile, interest rates for 30-year mortgages are predicted to increase to 5.5 percent by 2020, which is still relatively low on a historical perspective but a whopping 37.5 percent higher than current rates of about 4 percent.

That means Hawaii homebuyers, already challenged by some of the highest prices in the nation, will face a double whammy of higher prices and interest rates.

At a median price of $800,000 and interest rate at 5.5 percent, a homebuyer would need $160,000 for a traditional 20 percent down payment and have monthly mortgage payments of about $3,634, which does not including property taxes, insurance and any other fees.

“Affordability is always a concern in Hawaii, and it will further erode as home prices and interest rates edge further upward over the next several years,” the UHERO report said.

Achieving homeownership might become more of a dream than reality for many local families and millennials who rent or live with family. This will be an issue for lawmakers in the years to come as they also contend with a growing homeless population.

Recognizing the tough climate for homebuyers, lenders are starting to offer special programs. Wells Fargo, the nation’s largest lender, announced Thursday a new program that offers a conventional mortgage with as little as 3 percent down. It’s aimed at helping first-time and low- to moderate-income homebuyers, who have had a difficult time buying because of the high prices and super-tight lending standards following the mortgage meltdown. Other lenders could be following suit with similar programs.

Since the Great Recession, Oahu has led the state in the housing recovery.

While Oahu home prices are now above 2007 prices, prices remain well below those levels on Maui and the Big Island and a bit below the previous peak on Kauai, the UHERO report said. Construction is now in upswing in all counties, but the neighbor islands were later to the party than Oahu, where job growth began in 2010.

“A condo building boom in Kakaako, strong commercial activity, and the Honolulu rail rapid transit have driven the industry on Oahu,” the report said. “The legacy of the 2000s housing boom prevented an early pickup in residential building on the neighbor islands, and the magnitude of the current expansion will fall short of that bubbly period.”

Jaymes Song is a top-producing agent with Better Homes and Gardens Real Estate Advantage Realty in Kahala. He can be reached at 228-3332 or JaymesS@BetterHawaii.com.