Home sales,
prices soar

Low interest rates help single-family
home and condo sales soar
on Oahu despite the recession

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By Russ Lynch
rlynch@starbulletin.com

Home sales boomed on Oahu last month, boosted by low interest rates that economists said led many homeowners to refinance old mortgages, putting cash in their hands and giving them an incentive to shop around for a better place.

Resales of existing single-family homes were up 29.4 percent to 242 properties last month from 187 in February 2001, according to the Honolulu Board of Realtors.

And many sellers did not have to cut prices to move their properties. The median sales price -- the midpoint between the highest-priced home and the lowest -- was also up, by 25.1 percent, at $312,800 last month from $250,000 in February 2001.

The condominium resales volume was up 16.7 percent year over year, at 329 units last month compared with 282 in the year-earlier month, and the condominium median price was up 8.3 percent at $137,000 from a year-earlier $126,500.

Economists pointed out, however, that Oahu resale prices and volume are not as high as they were in the mid-1990s.

It was good news that prices advanced year over year along with volume, said Leroy Laney, an economics professor at Hawaii Pacific University and former chief economist at First Hawaiian Bank.

"I am not really surprised," said Laney, who has written and seen others write comments on the unevenness of the current recession. Technically, Hawaii is still in a recession, he said, but it does not hit all areas of the economy.

"Anything that touches on interest rates is strong, whether it be auto sales or homes or refinancing or durable goods," he said.

People have refinanced loans at a much lower interest rate, and that has several effects. One is that it makes them more comfortable with their monthly payments, and another is that it puts more money in their pockets, Laney said.

"It is definitely time to consider that it might be time to buy," he said.

Isle real estate research expert Michael Sklarz pointed out prices are not as high as they were in the summer, because winter is traditionally a slower period. And, he added, they have some way to go to match where they were in the mid-1990s, when the median among single-family homes was $360,000 or so.

But "the count is pretty good," Sklarz said. "Generally, we're seeing this nationwide. The real estate market just continues to be strong," he said, crediting the strength not just to lower interest rates, but to the "terrible" stock market.

"People who were freaked out by the (decline in) tech stocks decided that, 'At least with real estate I'm not going to lose all my money overnight,'" and can get a nearly guaranteed decent return over five years or so, Sklarz said.

He said interest in Hawaii real estate from mainland buyers continues to be strong.

Since the Sept. 11 terrorist disaster, visitor counts have been rising, and there seems to be a more positive outlook. Clearly, more people are deciding now is the time to buy, Sklarz said.

In related news, a national survey by the Mortgage Bankers Association showed a lower percentage of Americans are falling behind in their mortgage payments.

"It is a good sign," said Douglas Duncan, chief economist for the association. "It supports the view that the (national) economy is expanding."

The Oahu home resales figures come from transactions listed in the Honolulu Board of Realtors' computerized Multiple Listing Service.

The monthly survey covers only previously owned property.