The Ballesteros family is selling their Aina Haina home to take advantage of high prices. Mom Maria, son Christopher, 13; daughter Mariana, 3; and son Gabriel, 18 months, spent some leisure time in the back yard Friday.

June sees first recent
spike in number of Oahu
homes offered for sale

An increasing number of homeowners
are putting property on the market
to seek top sales prices

Wesley and Maria Ballesteros hadn't been planning to sell their home of five years. But neither did they expect the Aina Haina house to more than double in value since they bought it.

So in June they decided to turn that paper wealth into cold, hard cash, putting the home on the market for $639,000 in the belief that they may never get such a good price again.

"My guess is that prices will come back down," says Maria, who quickly found a buyer. "I just don't think they can keeping going up and up."

She's not alone. The number of homes for sale on Oahu has jumped in recent months as an increasing number of homeowners lock in profits in the expectation that planned interest rate hikes will choke off demand.

The number of resale homes on the market remains near historic lows.

There were just 1,036 single-family homes and 1,450 condominiums for sale in June, compared with typical monthly levels of around 2,000 and 4,000, respectively, throughout the 1990s, according to the Honolulu Board of Realtors.

But the June figures are the highest this year -- and in the case of single-family homes, the highest since September.

If inventory continues to grow, it could moderate the supply constraints that have contributed to the eye-popping home-price growth seen in the first half of the year.

"That's a significant rise in inventory," said Harvey Shapiro, research economist for the Honolulu Board of Realtors. "The question is: Is this the normal summer bounce? This really is something we need to watch over the next few months."

Summer typically sees an increase in sellers going to market but recent inventory levels are up sharply from the depths plumbed in April, when 784 single-family homes and 1,034 condos were on the market.

No one is predicting that Hawaii's housing boom is running out of steam. Prices continue to set records each month and properties average less than 20 days on the market before being sold, often for a premium as competing bids drive up prices.

But the recent bounce is the most pronounced since property listings shot up in the early 1990s.

Bank of Hawaii chief economist Paul Brewbaker pointed out that inventory remains "about as tight as you can possibly get," but also noted that a "dramatic" increase in inventory in 1989-90 presaged the collapse of that era's Japanese-fueled bull market.

"Is this the beginning of the end?" he said. "It's very possible that the low point for inventory has been hit already."

Brewbaker noted that a rise in mortgage rates that began in April seemed to trigger inventory growth, "almost like a light switch was flipped."

"So, a bunch of guys who previously might have qualified for a mortgage for a single-family home suddenly didn't and they've had to move down the food chain and look at condos instead," he said.

Some buyers are even finding it harder to sell than before.

Stephen Cipres has been trying to sell his home on Kaneohe Bay since May. The sale has taken significantly longer than many properties partly due to the $1.1 million price tag -- higher-priced homes usually take longer to sell. But Cipres, who also has been looking for a new home, said there is also noticeably more selection for buyers these days.

"I've seen a lot more stuff on the market in the last few months. It's pretty exciting, actually," he said.

Prices for Hawaii homes are not expected to fall anytime soon. Oahu single-family homes hit a record $481,800 median resale price in June, while Kauai also saw a record $528,000.

But Maui, which has been one step ahead of the other islands in the real estate boom, may serve as a leading indicator. Prices there were lower in June than in recent months, settling at a $500,000 median price.

Inventory remains extremely low, said Roy Sakamoto, president of Sakamoto Properties in Lahaina, and he expects prices to continue to rise slowly through the rest of the year. But it's not quite the sellers' market it once was.

More inventory is seeping onto the market, especially at the higher end, and Sakamoto feels prices have hit a plateau.

"We're seeing more of an impasse between buyers and sellers, which we didn't see before," he said. "Buyers will still pay X amount, but they're not willing to pay X plus Y like before."

Though sellers and real estate agents like a tight market because it drives up prices, Bank of Hawaii's Brewbaker said an inventory increase, if it persists, would make for a more stable market and help moderate the affordable-housing crunch caused by runaway prices.

Existing economic fundamentals would support a median Oahu single-family home price in excess of $600,000, he said, but conceded that signals such as the growth in housing inventory indicate the real estate market has entered a new phase.

"We just came out of halftime. It's the third quarter now and even though there is plenty of game to be played, the game is half over."


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