Condo median hits $310,000

Oahu home sales activity is easing off of its crazy pace, but prices continue to rise

OAHU home prices in June couldn't equal May's record, but still managed to exceed the year-ago levels as the number of transactions declined, according to the latest statistics from the Honolulu Board of Realtors.

"As the first half of this year comes to an end, our statistics show what we've been expecting -- fewer sales and higher prices," said Harvey Shapiro, board economist. "These price increases are in spite of the sizable expansion we've had in the available inventory."

The median home price on Oahu was $639,000 in June -- short of the record of $668,300 set in May, but well above June 2005, when the median home price was $593,300. A total of 368 previously owned homes were sold in June, compared to 440 in June 2005.

There were 1,836 single-family homes and 2,582 condominiums actively being marketed in June, significantly higher than the inventory at the same time last year. Inventory levels are back up to the same levels as 1999, said Shapiro, though still well below the counts of the early 1990s.

At a mid-year real estate forecast presentation last week before the Hawaii Developers' Council, Shapiro said he expected a reduction in demand for housing.

Gone are the days when homes were snatched up after only 20 days or less on the market, according to Shapiro. Homes are staying on the market longer -- an average of 52 days in May -- while fewer premiums are being paid.

The total dollar volume of home sales in the first half of this year was $2.8 billion, 3.2 percent higher than the $2.7 billion generated in the first half of last year.

"If you look at the cycle, we're closer to the previous high than to the previous low," said Shapiro. "We're still very healthy."

Mary K. Flood, president of the Honolulu Board of Realtors, said the housing market continues on a more stable path.

"As the market continues to normalize, home buyers and sellers are both going to benefit," Flood said. "Buyers will have more time to comparison shop, while sellers will see slightly higher prices for their properties."

Condominium sales also dipped as a result of a higher median sales price of $310,000 in June. The June median was $5,000 more than in May, and $46,000 higher than in June 2005.

A total of 641 existing condos changed hands in June, according to the board's statistics, 62 fewer than the same month last year.

Despite the dip in sales in June, Scott Higashi, executive vice president of sales for Prudential Locations, believes there's still room for significant growth in the condominium market.

"Condo living is attractive to many kinds of buyers," he said. "Especially those moving from California, who want a second home, baby boomers and downsizers."

Research by Prudential Locations indicates that the median sales price of a condo in the first quarter of this year is up 34 percent over last year.

"We predicted a year ago that the median prices were lower than they should be for condominiums," he said. "We felt there would be continued room for growth and average sales prices are proving that out."

Inventory levels for condominiums more than doubled in June of this year compared to last year -- with 2,582 condos actively marketed last month compared to 988 at the same time last year.

Jim Wright, president and chief executive of Century 21 All Islands, is confident 2006 will remain a strong year for residential real estate.

Sales activity for the company is down about 9.3 percent, said Wright, but dollar volume is still up 3 percent so far this year. He said the slowdown in activity was a reflection of the real estate market nationally.

"We're calming down to a normal market," he said. "We slowed down off the hottest year in real estate history [in 2005] and we're still going to have an extraordinary year this year, maybe the second best in history."

Wright said buying and selling activity should remain strong, as long as the interest rates remain below 8 percent.

Mortgage rates for 30-year loans offered in Hawaii are hovering around 6.5 percent, but are expected to rise steadily.

After a more-than-eight-year run, the slowdown in the housing market was inevitable, according to Shapiro. He predicted sales will decrease 10 percent, while prices will increase between 5 percent to 10 percent at the end of the year.