Home sales and
prices still climbingAugust's $394,500 median
price beats the peak set
during the Japanese boom
Despite home prices that have passed the peak of the 1990s bubble, Oahu's housing market is not heading for a fall any time soon, local economists say.
Home resales on Oahu continued to soar in both volume and price last month, with the median price among single-family houses hitting $394,500, the highest since the Honolulu Board of Realtors began keeping records in 1987.
"I'd say it's still a green light on Oahu," said Paul Brewbaker, chief economist at the Bank of Hawaii.
The previous high of $392,000 was reached in 1990 at the peak of the Japanese-investment bubble.
But neither Brewbaker nor Leroy Laney, professor of economics and finance at Hawaii Pacific University, believes Oahu homes are overvalued today.
"It's hard to make an argument that homes are overvalued in the broad sweep of time during which you would expect real estate to appreciate," Brewbaker said.
Laney agrees.
"As far as affordability, it's relative to everything else. At some point you'd expect it to exceed that high. Everything else, like personal income, has gone up so in (inflation-adjusted) terms; it's not yet as high," he said.
During the Japanese bubble, which ended in 1990, the rapid price acceleration made the period a boom. The pace of price increases this time around has been relatively steady, Brewbaker said.
"It's not nearly as rapid a rate of increase," he said.
The August median, the point at which half the units sold for more and half for less, was an increase of 9.6 percent from $360,000 in the same month last year.
While condominium prices were not as high as they were during the boom, the median sales price of $179,400 was up 19.6 percent from the August 2002 median of $150,000.
Mortgage rates have begun to creep back up, but the sales momentum continues, with 425 single-family homes changing hands in August, up 24.3 percent from 342 in the previous August.
Brewbaker predicts the pace of sales could slow somewhat as a result of rising rates.
"There probably would be some slowdown," he said.
Last month, 646 condominium units were resold, up 16 percent from 557 a year earlier.
Fixed mortgage rates bottomed out in June and have since risen a point and a half, said Harvey Shapiro, research economist for the Board of Realtors. It is too soon to know if the higher rates will inhibit sales, he said.
The monthly figures report only sales that have closed, which can be a couple of months after sales agreements are reached, Shapiro said.
In other words, the August report covers many agreements made before mortgage rates began to rise.
Total dollar sales volume for the first eight months of 2003 rose to $2.2 billion, up more than 35 percent from $1.6 billion in the first eight months of last year, said Anne Keamo, chairwoman of the 4,000-member Board of Realtors.
The association reports only sales of previously owned homes, recorded in its computerized Multiple Listing Service.
Sales of newly built homes also have been strong, but developers have said new-home sales now are being inhibited by a dwindling inventory.
