Home sales Oahu's residential real estate market continues to surge, with soaring prices and an inventory fed by an unprecedented supply of properties offered for sale.
keep rising
More homes were put up
for sale last month than at
any time since tracking began
By Russ Lynch
Real estate experts say the market will have to pull back, but when is anybody's guess. Low-interest mortgages and pent-up demand, held in abeyance by the poor island economy of the 1990s, have brought about a situation both buyers and sellers like.
That showed strongly in July, when single-family home sales were 12.6 percent higher than a year ago. Condo sales were up 28.8 percent, and prices rose in both categories. Seeing an opportunity to sell in a high-price market, owners put 537 single-family homes, a volume unseen since the Honolulu Board of Realtors began keeping track in 1986. Similarly, 714 condos were put on the market last month, the most since 1995.
Demand, low interest rates and high prices are leading to changes, such as:
>> Young people and lower-income families that can afford to buy for the first time are doing so.
>> Older, established homeowners are moving up to better homes, upgrading their standard of living.
>> Some longtime homeowners are moving to smaller, more convenient homes, such as secure apartments they can lock up while traveling.
>> Owners are realizing they can sell their homes for a profit and still live nicely in a newly purchased smaller home.
"They're either buying up here or buying down here or leaving," said Herbert Conley, managing director of the residential business of Coldwell Banker Pacific Properties. "Some people with a big house may say, 'the kids are gone and I can cash in because prices are higher.'"Buyers can purchase a nicer house for the same monthly payment by going from a 9 percent mortgage to a 6 percent mortgage, he said.
"If you could have a continuing growth in population and incomes, it could never end, so long as you had land to build on," Conley said. "But at some point, it does have to slow down."
The fact that more homes are pouring onto the market points in that direction.
Already the inventory of homes for sale on Oahu, which had reached record lows, is climbing back, a movement that should ease the upward push on prices.
Conley sees "a natural slowdown" as real estate winds through yet another cycle.
For now, real estate salespeople, buyers and homeowners don't much want to hear that, as evidenced by a new crop of "for sale" signs and near-crowding at weekend open houses.
According to figures from the Honolulu Board of Realtors, which issued its monthly Oahu home-resales figures yesterday, the average condominium unit was on the market 29 days from listing to sale last month.
Prices in single-family houses are about where they were in 1990 before the market dropped, according to Ricky Cassiday, research director for Prudential Locations.
"There are a lot of houses coming on the market, maybe not at prices you'd like but still you have something to buy," Cassiday said. "Some of the people have been stuck out there for a long time. Now they get a chance to move up," say from Waipahu to Waikele or from West Oahu closer to town.
"They are saying, 'now we can afford to move to a more expensive place' and still pay the same," he said.
Others might see it as a chance to move to a smaller place, now the kids have gone, perhaps a classy condo in a nice neighborhood instead of their very lived-in old house.
Prices should soon start easing a little, Cassiday said, but there are a number of areas where prices and action are really high.
Coldwell Banker's Conley pointed out that 528 condo units changed hands last month. "That's double what it was four years ago," he said. "It's the first time over 500 sold since 1990," when prices were going down, not up, Conley said.
The 528 sales represented a 28.8 percent increase over 410 in July 2001. The condo median sales price — the point at which half sold for more and half for less — was $157,000, up 12.1 percent from $140,000 a year earlier.
A total of 366 single-family homes were resold last month, up 12.6 percent from 325 in July 2001, at a median price of $320,000, up 5.3 percent from $304,000 a year earlier.
