What you can get
for $450,000
Oahu's median price translates
to small, old, noisy or far away
Dream homes prove elusive
When Sarah Roper began shopping for a home in and around Kaimuki four months ago, she soon found herself asking: What's wrong with this picture?
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"It's amazing. You can't believe what people are trying to sell for that kind of money," Roper said. "Even homes in the $600,000 range are in terrible condition."
It was a stark introduction to the reality of the median home price, the Honolulu Board of Realtors' key barometer of the market's strength.
That figure came in at $451,000 for the second quarter of 2004. But how far does that really go in today's market?
Not nearly far enough for many buyers.
A look at available homes in that range showed that, while there are wide regional disparities in size, condition and quality of location, buyers face an increasingly unattractive selection of properties that don't seem to justify the high sums being paid.
"Either way you look at it, it's not a pretty picture. Each house will have something major that you don't like," said Roland Kennedy, a Waikiki hotel employee who has been looking with his girlfriend, Jill, for a home in town for six months.
Kennedy says the mid-$400,000 range would "max" him out financially, even with today's low interest rates, but he's been unable to find anything acceptable in that range anyway.
He says homes that are strong in one facet, such as size, will invariably be on a street roaring with traffic or need costly repairs.
"The Realtors always harp on the strengths (of a particular home) like location, but they kind of gloss over the fact that you're going to have to spend $70,000 fixing it up," he says.
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Kennedy wants to live close to town, and shudders at the thought of commuting from lower-priced west and central areas such as Kapolei or Mililani. But he may have to opt for that if prices don't cool down.
His situation illustrates the tough choices now available to buyers in the median range.
For those looking near the center of town, a budget around the Oahu median buys a tiny, rundown property, often in need of fixing up that can add more than $100,000 to the home's ultimate cost.
The situation is similar in Kailua, Hawaii Kai and most other neighborhoods near town, where $450,000 gets you a home that needs to be torn down and rebuilt.
In Leeward and Central Oahu, the median price buys a larger, newer home, sometimes even with a pool. But it comes with that exhausting daily commute.
"I wouldn't want to tell anybody that the home they just bought isn't their dream home. But as prices go up, it becomes more about what kind of compromises you are willing to make," said Scott Bradley, a managing director with Coldwell Banker Pacific Properties.
Others in the industry are a bit less charitable about the situation.
"The greed factor has definitely kicked in," said Artie Wilson, a partner with Prudential Locations Inc.
Wilson said the real estate market has been a boon for many homeowners, allowing them to sell homes for a handsome profit and trade up into better properties. But he added, "some of the prices people are asking now are just ridiculous."
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Wilson started out in the real estate business in the late 1970s selling spacious, well-kept waterfront homes on the Hawaii Kai marina for around $450,000, a figure that as of last week would not buy a single stand-alone home in Hawaii Kai.
"Things change," he said. "We're not going to see 10-cent cans of Coke anymore, either."
One reason that the median price is proving a source of frustration for some buyers is that it is not a particularly useful gauge of pricing activity in each of Oahu's disparate neighborhoods.
The median figure is the point at which half the sales were for a higher price and half for lower. But all of Oahu's residential areas have their own median. For the second quarter of 2004, these ranged from $229,000 for Leeward Oahu to $769,000 for the Diamond Head area.
And since many buyers focus their search on a particular area, the leaves the overall median as something of a statistical mirage.
"That's something that's often overlooked," Bradley said. "If you actually analyze the particular neighborhood you want, you're going to get a different picture."
Oahu's high prices haven't yet hurt sales; they remain at record levels, indicating there are still plenty of people willing to make the some of the compromises necessary for homeownership.
But many Realtors say a growing number of their clients are opting to stay on the sidelines for awhile.
Sarah Roper is one of them. After searching for four months, she's decided that her dream home does not exist -- at least not in her price range.
"We've given up," she said.
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