Oahu house prices hit record $650,000

One expert says the monthly statistics are deceptive and the island's housing market has cooled off

Even Oahu's heavy rain couldn't dampen the island's residential real estate market, which -- despite all indications that it has been softening for months -- set a single-family home price record anyway.

The Honolulu Board of Realtors said yesterday that 392 single-family homes changed hands last month, a 4 percent increase from the 377 properties that changed hands in March 2005. Condominium unit resales also were up 2.8 percent from the year earlier, with 696 properties changing hands last month compared to 677 in March 2005.

"The median sales price for single-family homes continues to increase, establishing another record for Oahu at $650,000," said Mary K. Flood, president of the Honolulu Board of Realtors. The condominium median price declined slightly this month, but it is still near the record level achieved in February of $315,000."

The median price among the Oahu houses sold in March rose 23.7 percent from the year-earlier median of $525,500.

The March median price for condominiums was up 35.7 percent from the year-earlier median of $230,000. The median price is the point where half the properties sold for more and half sold for less. The Realtors association tallies resales of previously owned homes, but not sales of new homes.

Real estate experts were not surprised that home prices continued to rise, although it's anyone's guess why March sales volume rose from the previous year.

"I would really think that it was just a blip, because the trend is down and we have passed the peak of sales," said Harvey Shapiro, Honolulu Board of Realtors research economist. "A rest is clearly in order."

The March rise in sales volume wasn't great enough to offset the losses in January and February, and the market is expected to continue softening -- eventually winding up with year-end price appreciation in the 10 percent to 15 percent range, he said.

William S. Chee, chief executive officer of Prudential Locations, the second-largest real estate firm in the state, said that while the monthly numbers showed continued gains, they are somewhat deceptive.

While March could hardly be called a slow month for Oahu's residential real estate market, the momentum of last spring has long gone and some homeowners have found it more difficult to sell their properties at a premium, Chee said.

"The very high appreciation rates that we once enjoyed have certainly slowed down and we've seen the number of transactions drop," he said.

The total value of Oahu home sales in the three months ending in March was $1.34 billion, an increase of 14.2 percent, or $167 million, compared to the $1.17 billion a year earlier.

"Even with the higher number of residential sales in March, total sales for the first quarter showed a small decline from last year," said Shapiro. "This reduced demand, along with the renewed availability of housing, means that the market is moving forward on its path toward stabilization."

Despite signs of softening during the past six months, prices stayed constant in March, causing real estate professionals to disavow any talk of an impending bubble.

"This market doesn't really favor one side or another -- it's normalizing," Chee said. "It will still be good for the people who are ready to sell, but it won't be as wild and crazy."

Chee said some areas had better results than others. Price increases of single-family dwellings in places such as Kalihi have slowed significantly, he said.

"The price points are still holding, but in some areas where prices have overshot their boundaries, we have seen some weakening," Chee said.

As a result of softening in the market, which began back in October 2005, buyers can more easily find inventory that suits them and negotiate a better deal than they could in the frenetic market of two and three years ago, said John Riggins, owner of John Riggins Real Estate.

"There are a lot more properties on the market and there is a lot more price adjustment going on," Riggins said. "Sellers aren't pricing property 25 percent higher than the last sale anymore -- those days are gone."

Sellers who want to fetch top dollar for their properties or move them quickly in this market must now clean, repair and stage their homes, Riggins said.

The use of low-cost, minimal service programs like Help-U-Sell and Assist-To-Sell, which grew phenomenally during the recent boom years when it wasn't hard to move property, will likely drop, he said.

"It's going to take more to sell properties," Riggins said.