Condos on Oahu
set price record

A median resale price of
$219,000 reflects a vibrant market
despite flat September volume

Condominium prices hit a record high last month as Oahu's real estate market showed it still had plenty of life despite a plateau in sales volume.

The median resale price of a condo on Oahu rose to $219,000 in September, according to monthly sales data released yesterday by the Honolulu Board of Realtors, extending a climb into record territory that gained pace earlier this year after skyrocketing housing costs forced some buyers to turn to more affordable condos.

"Condos typically follow the homes market; they sort of lag behind the curve. But they're catching up now," said board President Judith Kalbrener.

The September median for condos represented a gain of 21.7 percent over September 2003's $180,000. The median is the price where half of homes sold for more and half for less.

Single-family home prices also climbed in September to $475,000, a gain of 20.3 percent from a year earlier. The median was also $25,000 higher than the August figure, though off the record high of $481,800 set in June.

Though prices stayed solid, more signs emerged that the market might be coming off the frenetic buying pace seen this summer, in which homes sold in the blink of an eye and often for more than the asking price.

For the second straight month, sales volume fell. Buyers signed sales contracts for 410 single-family Oahu homes in September, compared with 419 homes sold in September 2003.

August's sales volume decrease was the first significant year-on-year drop for single-family homes since April 2003.

September condo sales, meanwhile, slipped to 701 from 703 the previous September -- the first year-on-year decline for condos since October 2001.

"A number of homes are still selling over the asking price, but we're seeing some signs that the market might be leveling off -- not going down yet. There's still a lot of demand, but things are plateauing," said Kalbrener.

As another sign that the market's high-water mark might already have been reached, properties sold at a slightly slower pace. Single-family homes and condos both spent a median 25 days on the market before being sold last month, a historically low figure but up from midsummer, when homes spent less than 20 days on the market.

Homes sold for more than the asking price 21.7 percent of the time in September, while condos fetched a premium 13.1 percent of the time. The board said those figures were down from midsummer levels, but provided no comparison.

But if the market is slowing somewhat, it should remain very strong for the foreseeable future, said Bank of Hawaii chief economist Paul Brewbaker, who noted that mortgage rates have fallen during the second half of the summer to around the rock-bottom levels seen in the past two years.

Several local mortgage lenders are advertising 30-year fixed rates of 5.375 percent and lower.

Brewbaker said rates should remain attractive through next year and into 2006, rising slowly as the economy picks up pace but probably to no more than 6.5 percent.

"That shouldn't really represent much of a threat to the market," he said. "6.5 percent bites harder than 4 percent, but it's not the kiss of death."