Oahu homes
hit new record

As the median price rises,
more buyers are shifting
focus to condominiums

Oahu's home prices hit a record again in March, sending prospective buyers to the more affordable condominium market.

About half the homes sold on Oahu last month netted more than $550,000, up 25.3 percent from $439,000 in March 2004, according to data released yesterday by the Honolulu Board of Realtors. The previous record price for homes was $525,500, set in February.

"Prices went up again, but we've still got a lot of demand and most properties are getting multiple offers," said Judy Kalbrener, president of the Honolulu Board of Realtors.

Condominium prices did not surpass the $235,000 record set in February; however, half the condos sold for $230,000, up 21.1 percent from the year-earlier $190,000.

After posting two months of declining sales volumes, Oahu's single-family home market picked up in March. A total of 377 single-family homes changed hands last month, up 8.3 percent from 348 sold a year earlier.

Condo sales, which totaled 677 in March, increased 11.7 percent, partly because of rising single-family home prices and declining inventory, said Harvey Shapiro, research economist for the board of Realtors.

Condominium sales have outpaced home sales almost 2-to-1 for the first three months of the year.

"Rising prices have moved some purchasers from the single-family home market segment into the more affordable condominium category," Shapiro said. "Each time prices go up, it eliminates someone from the market."

The trend of shifting sales patterns is expected to continue, particularly since the cost of financing a purchase has risen in the past several months and the nationwide average for 30-year fixed mortgages is now above 6 percent, he said.

Despite the shift, single-family home prices are expected to continue rising as long as inventory stays relatively low on Oahu, Shapiro said.

While the number of sales listings for single-family homes grew 5.9 percent to 847 in March from 800 a year ago, inventory is still at near-record lows.

Condominium inventory is tightening as the market grows in popularity. Last month, sales listings for condos dropped 2.3 percent to 1,029 from 1,053 in March 2004.

Oahu's tight market continues to frustrate buyers and likely will for some time, Kalbrener said.

"At any one time, there is not a lot of selection, and the things that we have sell very quickly, so buyers don't have a lot of time to decide," she said. "Most buyers have lost out more than once -- either they were overbid or didn't get there fast enough."

While condominium inventory has been at a shortage, buyers are still very choosy, said Jack Leslein, principal broker and owner of East Oahu Realty.

"People who are upgrading into larger condominiums and first-time buyers, who find that they can't qualify for today's higher-priced single-family homes, are looking for something that is extra-nice in a condominium," Leslein said.

In today's market, condominiums that are in prime showing condition will sell quickly and for more than the asking price, he said.