A quickening pace has buyers
willing to make offers on first sight
and above the asking price
Prospective homebuyers on Oahu would be wise to observe the Boy Scout axiom, "Be prepared."
Home resales on the island sold at the fastest clip ever in May, putting increasing pressure on buyers to be ready to put in offers at first sight -- often above the asking price -- or be left behind.
"You can't dilly-dally these days," said Leonard Loventhal, executive vice president with Hawaii HomeLoans. "We've had clients who had all their loan pre-qualifications and everything else in order but still missed out by a matter of hours. If something is priced right, it goes like that."
In its monthly report on sales activity, the Honolulu Board of Realtors said single-family homes sold in an average 19 days and condos in just 20 days, both record lows.
The high demand caused the median resale price of a single-family home to resume its steady climb into uncharted territory, hitting a record $445,000 in May, a 21.9 percent gain over May 2003's median price of $365,000.
Condominiums sold for a median $195,000, down from $205,000 in April but still 17.5 percent higher than May of last year, when it came in at $166,000.
Prices were underpinned by the increasing willingness of buyers to pay a premium as a way to edge out the competition. The board said 29.8 percent of single-family homes and 21 percent of condominiums sold at higher than the asking price, adding that these were probably records.
Bank employee Michael Nishida was fortunate to land his Makiki home last month at the asking price of $425,000. But the trade-off is that he'll need to fix up a few things.
"Everything. The plumbing, the carpentry, the electricals, the flooring, the painting -- the works," he said.
The home had dropped out of escrow and Nishida acted fast, putting in an offer a day after viewing it and ending a year-long search in which he reckons he looked at "70 to 90" homes.
"When I first started looking, it seemed you could offer below asking price. Later, you definitely had to match the asking price, and now you have to go over asking. I just got lucky," he said.
Mary Begier, the board's president, said many homebuyers seemed to have been spurred off the fence and into the market in May by recent increases in interest rates, which have climbed to between 6 percent and 6.125 percent, from around 5.5 percent a year ago.
"With rates going up, I think that's brought a different group of buyers out of the woodwork, people that are jumping on the bandwagon out of fear that rates have seen their lowest point," she said.
Indeed, buying activity increased, with 405 single-family homes sold in May, the highest monthly number this year. Condo-buyers, meanwhile, purchased 712 units in May, a monthly record.
The higher sales activity may also have been the by-product of a slight increase in inventory on the market, which hit record lows in preceding months. The number of single-family homes put on the market in May grew to 864 from 784 in April. There were 1,203 condos put up for sale, up from 1,034.
Harvey Shapiro, research economist with the Realtors board, said that was not unexpected since summer usually sees an uptick in the number of properties put on the market.