Slowdown?
What slowdown?

Oahu home prices and the number of homes sold rose in May, surprising Honolulu real estate agents

Oahu's real estate market continues to be hot going into summer, with record-setting prices and rising sales bucking expected trends and running counter to many softening mainland markets.

The median price for a single-family home on Oahu rose to a record $668,300, a 9.6 percent year-over-year increase from the $610,000 in May 2005. Although economists and real estate analysts have predicted a continued decline in sales as rising prices eliminate buyers, sales were up 2.2 percent from the previous May.

The median condominium price in May rose 15.1 percent to $305,000 from the year-prior $265,000, but the number of sales declined 12.6 percent.

Honolulu real estate agents were pleasantly surprised by the market's performance in May, said Mary K. Flood, president of the Honolulu Board of Realtors.

"We are expecting a strong summer, as there continues to be robust demand for all Oahu residences," Flood said.

But while the sales figures show continued strong demand in Honolulu, the amount of time properties are taking to sell has increased, suggesting that the frenzied pace of the past few years is returning to more normal market conditions, said Harvey Shapiro, research economist at the Board of Realtors.

"The frenzied period of market expansion that lasted eight years is clearly over and the Oahu housing market is returning to steady-state, historical conditions," Shapiro said.

Single-family homes took 52 days to sell from the time of listing to a contract, which is a vast change from the 20- to 30-day range Honolulu has experienced in the past few years, he said. Condominiums, which are taking an average of 38 days to turn over, are showing the same pattern, Shapiro said.

"The longer market time shows that buyers are being more careful in selecting properties to purchase," Flood said.

The year-to-date picture also shows some softening in Honolulu's housing market.

While the median prices for the first five months of 2006 rose 14.6 percent for single-family homes and 28 percent for condominiums, sales volume for the year is down 6.3 percent for single-family homes and 10.6 percent for condominiums.

Current conditions have made the market more attractive to local buyers, said Mary Begier, owner of Mary Begier Realty.

"Our local people don't like to be rushed. They don't like to feel like they are in a frenzy or that they are taking something from someone else," Begier said. "Now, many of them feel like they finally have a chance."

An increase in properties on the market, combined with a decrease in the number of home seekers, also has favored buyers who have found reduced prices in some regions, said Carky Ainlay, owner of Homequest Realtors, who specializes in the Windward Oahu market.

"My take is that the market is kind of slow, and I'm surprised that the prices are showing an increase," Ainlay said. "It's possible that a few high sales prices may have skewed the median because it sure seems as if list prices are coming down."

The current market has given buyers more opportunity to take their time and negotiate for their best deal, but finding the right property at the right price may still be a challenge, she said.

"It's still not a picnic," Ainlay said. "If you represent a buyer and want to find a nice house under $1 million -- that's not easy."

Most sellers are still getting very close to their asking price, Begier said.

"Sellers are getting within five percent of their asking price and every once in a while we've still got some bidding wars," Begier said.