Housing market sizzles
Low mortgage rates helped sales
surge last month, capping off
a record year for Oahu
Another surge in Oahu real estate sales in December made 2003 a record year, with the highest number of sales and total price volume, according to the Honolulu Board of Realtors.
Last month, sales of previously owned single-family homes were up 9.2 percent from the previous December and condominium sales were up 17.6 percent year-over-year, the trade association said.
Prices rose to $399,000 in December, showing a 14 percent increase in the median for single-family homes over December 2002. Condominium sales rose 12.5 percent to a median of $180,000. The median is the price at which half of the units sell for more and half for less.
"December capped off a record sales year for the Oahu residential housing market, said Harvey Shapiro, the organization's research economist. "Both the number of reported closed sales and the total dollar volume of sales surpassed all previous years since the Honolulu Board of Realtors began collecting and analyzing sales data in 1985."
Continuing low mortgage rates coupled with Hawaii's improving economy have resulted in a strong performance for the real estate industry, said Shapiro, who expects market conditions to prevail well into the new year.
"The Oahu housing market continues to roar, basically due to the historically low mortgage rates," he said. "We should expect this heightened level of activity to continue until the Federal Reserve decides to raise interest rates."
Shapiro said more single-family resales took place last year than in any year since the association began collecting data in 1985. Condominium resales were the highest since 1990.
Combining these two housing categories to obtain total residential sales yields a 40.9 percent increase from last year, the highest number of sales since 1989, Shapiro said.
In the single-family market, the 379 sales reported last month brought the year's total to 4,419, up 13.1 percent from 3,906 in 2002. The increase was even more significant in the condominium market, where 583 sales last month brought the 2003 total to 6,907 units, up 27.8 percent from 5,406 in 2002.
Mary Begier, president of the 4,500-member Realtors association, said 2003 ended "on a very high note."
Total dollar volume of sales in the Oahu residential sales market reached $3.5 billion, an increase of 35.1 percent over the $2.6 billion sold in 2002, she said.
"The housing market is fabulous. It's very healthy. And when I say healthy, that doesn't just mean great sales, it means a marketplace that's got a lot of mixed activity," Begier said. "The buyers are coming from a lot of places -- our own local market, entry-level buyers, move-up buyers. We also have plenty of people from out of town."
The diversification of Hawaii's housing market will keep it healthy, Begier said, adding she does not believe today's soaring growth rates are signs that a bubble is looming.
"I don't believe that we are in a bubble," Begier said. "I've seen cycles of real estate, but the circumstances that exist today compared to when we did have a bubble are not the same. In the 1990s, we had an Asian demand. In the 1970s, there was an Arab demand. In the early1980s, we had a Canadian demand. We are more diversified now and that makes it a very different situation."
The market is slower and steadier than the last time Hawaii's real estate market bubbled from 1987 to 1990, Shapiro said.
"People are much more careful with their investments," he said. "In the late 1980s, it was pretty much buy at any cost. People today are more cautious."
Still, it's definitely a seller's market, Shapiro said.
The price of Hawaii's homes reflects the shortage of inventory on the islands and the demand, Begier said.
"I don't want to sound trite ... but you don't have to travel very far from Hawaii to be envied by everyone you encounter for being able to call Hawaii your home," she said.
If the price of Hawaii's homes continues to rise, it could slow down real estate growth by pricing some buyers out of the market when the interest rate goes up, Shapiro said.
However, there is still a great deal of affordable homes available on Oahu, more so than on Maui and Kauai, Begier said.
"The diversification of our developers has made that possible," she said. "We also have a larger amount of older stock."
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Single-family home
and condo purchases
remain red-hot on the
Big Island and Kauai
The pace of home sales on the Big Island and Kauai continued to sizzle during December and contributed to a hot finish on both islands in 2003.
On the Big Island, 221 single-family homes changed hands last month. Year-to-date, that drove the number of single-family home sales to 2,261, up 17.3 percent from 1,927 in 2002.
In the condominium market, there were 86 sales during December, bringing the total number of sales for the year to 934, up 32.5 percent from 2002's 705 sales.
Median sales prices on the Big Island also showed strong overall increases. In December, the median price for a single-family home was $227,000. For the entire year, the median price finished at $235,000, up 21.1 percent from the 2002 median of $194,000.
Median prices for Big Island condominiums also continued their strong performance. In December, the median price reached $199,000. Year-to-date, the median sales price for a condominium reached $180,500, up 8.7 percent from a median of $166,000 in 2002.
Big Island Realtor Dave Lucas of C&H Properties Inc. said the biggest problem remains lack of inventory.
"There's been no slowdown in sales, just less inventory," he said.
But Lucas believes that on the west side of the island in the Kona area, home prices which have been moving upward for several years may finally be stabilizing.
"The only thing going up right now is land and ocean-front condominiums," he said. "The rest of it seems to look more stable from what I see.
"On the west side, a lot of the local market has been priced out. Affordable housing on the west side for all intents and purposes does not exist, so I think that's why you see a lot of people turning to condominiums. They've become the alternative."
However, the east side of the island, where prices lagged, is a different story, Lucas said.
"Over on the Hilo side, we're seeing major price appreciation," he said. "They've experienced the biggest rises in over a decade. They were lagging, but not much anymore."
On the Garden Isle, there were 54 single-family home sales and 41 condominium sales in December. The median price for a single-family home during the month was $396,000 while the median price for condominiums was $387,000.
By year-end, the continued strong sales performance translated into a total of 667 single-family home sales, up 24.4 percent from 2002's 536. Likewise, the year-end median sales price rose 12 percent to $368,000 from a median of $328,500 in 2002.
Kauai's condominium market showed some of the strongest price appreciation over the course of last year. The median sales price in 2003 soared to $289,000, up 37.6 percent from a year-to-date median of $210,000 reached in 2002. There were 534 condo sales for the year, up 13.1 percent from 472 a year ago.
Real estate transactions for December and year-end figures for Maui have not been reported yet.
