CINDY ELLEN RUSSELL / CRUSSELL@STARBULLETIN.COM|
Kalani Keb took a smoke break while Saelyn Teo, 2, and her mother, Moana, cuddled on a cot at a camp for prospective real estate buyers of Moana Pacific condominiums. Some units will go up for sale tomorrow, and prospective homebuyers are paying others anywhere from $7 an hour to $500 a day to save their place in line. It's another sign of a housing market gone wild.
People are lining up to buy new
homes while low mortgage rates pour
gasoline on a burning market
SUE Pang is in the midst of a weeklong campout that has deprived her of her bed and left her soaked by sweeping rains, all for a chance at a not-yet-built condominium she's not even sure she can afford.
"It is crazy," says the 35-year-old Aiea woman, eighth in a line of dozens of people braving the elements to possibly buy one of the units in the first batch up for sale tomorrow at the Moana Pacific development. "But there's not many condos or houses on the market."
Hawaii real estate is enjoying one of its most notable booms in decades. Half-million-dollar homes are becoming the norm as demand far outpaces supply. It seems everyone is searching for a little piece of paradise.
"People are clamoring for new properties," said Harvey Shapiro, a researcher with the Honolulu Board of Realtors. "Our inventory is very low."
Nationwide, mortgage rates at historic lows are driving interest in properties, which are reaching record high prices in places where demand for homes is intense.
Add to that panoramic views of the Pacific Ocean in a city that hasn't seen major condo development in a decade and buyers can get frenzied.
Hawaii saw a similar real estate boom in the late 1980s and early 1990s, spurred by demand from Japanese investors. But unlike then, when eager buyers walked around with briefcases of cash, today's market is more stable and prices are less artificially raised, Shapiro said.
Paul Brewbaker, the chief economist at Bank of Hawaii, said low interest rates may be an impetus to the demand for new properties, but the strong island economy, with several years of steady job growth and rising incomes is a more fundamental factor.
"Interest rates are the fuel that's being poured on a fire that was already burning," he said.
Construction of the twin, 46-story oval towers at Moana Pacific between Waikiki and downtown Honolulu won't even begin until fall and isn't expected to be finished until the end of 2006, but its developers are offering 95 of its 706 units -- from one bedrooms starting at about $310,000 to a penthouse at $3.8 million -- for sale tomorrow.
Some prospective buyers began camping out a week earlier, though most buyers are paying others anywhere from $7 an hour to $500 a day to save their place in line.
They form a tiny shantytown of tents and tarp-covered shelters along a sidewalk outside the fenced-in lot, with a range of people from beer-chugging, pot-smoking surfer dudes, to a diminutive elderly woman unable to speak English.
"People do it for rock concerts," said Ron Tang, a 54-year-old electrical engineer hoping to get a two-bedroom condo. "It's no different."
Hawaii residents have been snatching up new properties at a number of developments. Recent sales of homes at the Ohia development on Maui prompted hundreds to spend a night in line for three- and four-bedroom homes priced in the mid-$300,000 to mid-$400,000 range -- considered affordable housing there.
Demand has been strong at points throughout the country, San Francisco, Orange County, Calif., New York, Washington and Boston among them. But camping out for an apartment may be a new phenomenon.
"Lead times are short everywhere," said Bruce Taylor, president of ERA Key Realty Services in Milford, Mass. "But not to where they're lining up for a place."
Not counting new properties like Moana Pacific, where ground hasn't even been broken, Oahu has posted two years of double-digit percentage increases in the median sales price of condos and single-family homes.
Prices for single-family homes on Oahu, the state's most populous island, rose 13.4 percent last year to $380,000, after climbing 11.7 percent the year before, according to sales figures from the Honolulu Board of Realtors. The median condo price rose more than $40,000 in the last two years, to $175,000 at the end of 2003.
Single-family homes sold on Oahu last month averaged 23 days on the market -- the shortest time since the board started keeping track in 1987. Oahu condos averaged 34 days before a sale last month.
Similar signs of growth are evident on the neighbor islands.
On Kauai, the median price of single-family homes went from $230,000 in 1998 to $328,000 four years later, then jumped again to $363,000 last year, according to the Kauai Board of Realtors.
Maui, Molokai and Lanai, collectively posted an 18 percent boost in the average price of a single-family home sold in the first two months of 2004 compared with the same time last year. The 173 properties sold in January and February averaged a commanding $698,337 price tag.
And on the Big Island, the number of building permits hit a record last year. The total of 4,507 was 22 percent higher than 2002.
Together, these numbers indicate an island population desperate for new properties. If Moana Pacific is any indication, people are going to new lengths to acquire them.
"There's just not a lot of there to choose from," said Keoni Ball, vice president of the Carol Ball and Associates realty firm on Maui. "You see something you like, you better put an offer in that day and it might have to be above what they're asking."
At the razed lot in Honolulu that soon will give way to the glistening glass towers, many paid to wait found the situation bizarre, though others were simply happy to be earning a check.