Real estate rebound in sight

Last month's prices and sales on Oahu cheer market mavens

Chicken Little, stop already.

After months of speculation about a drop in Oahu's real estate market, local economist Paul Brewbaker and others say that the much-anticipated fall might already be over -- or at the very least the sector is coming in for a gentle landing.

"It's not implausible that we could have seen the market already hit rock bottom; however, I think it's more likely that what we have actually seen is a notable dampening in the rate of descent," Brewbaker said as he scoured Oahu's most recent single-family and condominium sales statistics for market trends. The Honolulu Board of Realtors released its monthly numbers yesterday.

Since sales volumes hit their lowest point in the fourth quarter of 2005, economists and real estate watchers have been analyzing the transformation of Oahu's hottest-yet real estate cycle into a slower-moving buyer's market. From month to month, each downward movement in sales and/or prices has led to speculation about how low the market might go.

But Brewbaker, chief economist for the Bank of Hawaii, said a pattern of stabilization has recently emerged from Oahu's latest real estate statistics -- as it has in many other parts of the nation.

February's combination of rising prices, diminishing inventory and increased single-family home transactions could mean that Oahu's market has already stabilized, said Harvey Shapiro, the Honolulu Board of Realtors' economist.

"We may have already bottomed out," Shapiro said. "If the March numbers also look this strong, they could be very telling."

The number of transactions in Oahu's single-family home market rose 9.7 percent in February over the same month in 2006, while the median price increased 0.2 percent to $614,500.

"The number of transactions that closed confirms that there are still plenty of buyers and sellers in Oahu's marketplace," said Scott Higashi, vice president of marketing for Prudential Locations. "Last month was very strong. It outpaced last year."

While these statistics bode well for the health of the market, a 16.3 percent decline in single-family home inventory suggests an even greater comeback, Shapiro said.

"At the beginning of last year, the inventory was going straight up," he said. "The fact that it has turned is a sign that this market likely won't be as much of a buyer's market as we might have thought."

Century 21 All Islands real estate had its best month ever for closings and openings in February, said Ken Kubiak, a principal broker for the chain and the broker-in-charge at the Princeville office.

"We're jamming," Kubiak said. "We did have a bit of a slowdown as buyers played wait-and-see with the market, but I think it's coming back."

Sales volume in Oahu's real estate market, which began falling in 2004 and declined by nearly one-third from the fourth quarter of 2005 to the end of 2006, has been steadily climbing back up, Brewbaker said.

And while prices have remained relatively flat, it is important to note they have not been falling, either, he said.

At the start of the current cycle, Brewbaker said, he forecast that Oahu's median single-family home price would hit $750,000, as it did in some California markets.

"We stopped around $625,000, which seems like a very good value as compared to other places," he said.

When the slowdown became more obvious last year and the market started heading south, many people took a wait-and-see attitude, Brewbaker said. "People kind of went into their cave, but now they seem to be coming out and there's been a reawakening in the market."

Neighbor isles turn in murkier statistics While Oahu's home prices remained stable last month, performance was more erratic for the neighbor island markets. More than half of the single-family buyers on Maui paid $645,000 for their property in February, a 3.7 percent year-over-year price decline, according to data released yesterday by the Hawaii Information Service. The number of transactions, however, showed a 22.3 percent gain in sales from the year prior. Condominium sales on Maui rose 30.2 percent to $560,000, but sales declined by 0.7 percent. The number of sales of single-family homes on Kauai fell by 29.48 percent last month from February 2006 levels, while condominium sales fell 32.32 percent. The median price paid for a single-family home on Kauai fell by 5.23 percent to $615,500; however, the median price of a condominium rose 4.63 percent to $475,000. Nearly 22 percent fewer single-family homes on the Big Island changed hands last February as compared with the year earlier, while condominium resales fell about 44 percent. The median price paid by Big Island single-family home buyers, $420,000, was 2.23 percent below February 2006. Sellers also received less on condominium deals, with the median price dropping 31.91 percent to $400,000. Allison Schaefers, Star-Bulletin