Tuesday, June 8, 2004


Isle home prices rise
at fastest U.S. rate

Single-family houses gain 15.2%
in the year ending March 31

The federal government has confirmed what many antsy Hawaii home-hunters probably already suspected: The state has the fastest-growing home prices in the country.

Single-family home prices in the islands grew an average 15.2 percent in the 12 months ending March 31, the Office of Federal Housing Enterprise Oversight said in its latest

quarterly report on home resale activity. That was double the national average of 7.71 percent.

Hawaii had been in the report's top 10 for the past few quarters. But Oahu's recent blistering price growth, tied to an inventory crunch, jerked the state into the top spot nationwide, said Bank of Hawaii chief economist Paul Brewbaker.

"The neighbor islands saw huge percentage increases in the past, so why weren't we in the top spot before? My guess is it's because Oahu dominates the statewide statistics, and the Oahu price growth is now in the driver's seat," he said.

Oahu single-family resale prices grew 20 percent during the period covered by the report, from a median $362,500 in March 2003 to $435,000 this past March.

The report does not cover condominium prices, which grew 17.5 percent during the period.

Following Hawaii were Nevada, where single-family home prices grew 15.1 percent, Rhode Island at 14.8, the District of Columbia at 14.3 and California at 13.9.

The report said Hawaii prices grew 236.6 percent since 1980, also one of the faster rates in the country.

Scott Bradley, managing director of Coldwell Banker Pacific Properties, said prices should continue to rise throughout the year due to the still historically low inventory and interest rates as well as strong jobs and income growth.

"Even though rates have gone up a bit, we'll see prices continue to climb because inventory is still so low and the pace of buying is so strong. It's a classic supply-and-demand issue," he said.

Hawaii's claim to the top spot in price growth might be short-lived, however.

Bradley said a rise in interest rates had encouraged more sellers to put their homes on the market, perhaps trying to lock in profits out of fear that higher rates will snuff out today's strong buying.

He said there were 659 new single-family home listings on Oahu in May, the highest monthly figure since 2000, and 1,075 new condo listings, which he said was the highest of any month except one since 1990.

"If the pace of new properties on the market keeps expanding, that could rein in the price growth a bit," Bradley said.


Hot homes

Single-family home prices in Hawaii grew at a rate double the national average in the 12 months ending March 31. The U.S. average is 7.71 percent. A look at the top five areas:

State 12-month change
Hawaii 15.2 percent
Nevada 15.1 percent
Rhode Island 14.8 percent
District of Columbia 14.3 percent
California 13.9 percent

Source: Office of Federal Housing Enterprise Oversight


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