Oahu home prices remain stable

Experts cite high demand and low home inventory as reasons

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Good financing options and low inventory in November kept supply and demand almost exactly in balance for Oahu's residential real estate market, as prices held steady while sales trailed year-ago levels.

While there were fewer buyers from the West Coast last month, real estate experts said that demand from East Coast, international and local buyers continued to buoy the market.

The overall number of transactions was held down by low inventory in the $500,000 to $700,000 range, which has dropped 20 percent year-over-year.

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While mainland real estate markets continued to slump in November, the outlook for Hawaii's market remains stable, according to statistics released yesterday by the Honolulu Board of Realtors.

Low inventory and high demand, especially for the $5-million-plus single-family home market, has kept overall prices relatively stable despite a decline in the number of sales, according to Oahu's real estate experts.

And, there's been enough real estate activity from local, international and U.S. East Coast buyers to compensate for the drop off in demand from West Coast buyers who have been less inclined to buy second homes in Hawaii due to sliding home valuations in their primary markets, they said.

November's single-family home median, $610,000, was exactly even with the year-ago month. Likewise, more than half of the condominium buyers on Oahu during November paid at least $315,000, which a 1.6 percent year-over-year gain in median price.

Declining inventory coupled with relatively low interest rates also helped keep Oahu's market strong in November, said Harvey Shapiro, research economist for the Honolulu Board of Realtors.

While sales for both single-family homes and condominiums were down 16.4 percent and 10 percent respectively from the prior November, improved financing -- especially if the Federal Reserve cuts rates again at its Dec. 11 meeting -- could create market momentum, Shapiro said.

Low inventory levels are another reason that our market is still fairly healthy, Shapiro said.

November's single-family home inventory dropped 4.9 percent to 1,952 homes from the year-ago 2,052 homes, Shapiro said. In addition, the condominium inventory dropped to 2,442 units, an 8.8 percent decline from the previous year, he said.

While declining inventory has created a more favorable balance between supply and demand, it has made it more difficult for mid-range buyers looking for properties in the $500,000s to the $700,000s, said Chason Ishii, president of Coldwell Banker Pacific Properties.

"Most of the gain in inventory has been in the $1 million plus range. That's why resale activity is not as great as it could be," Ishii said, adding that there's been almost a 20 percent drop in inventory in the $500,000 to $700,000 range.

Ishii attributes the drop in median-level inventory to a decline in consumer confidence. Unemployment, while still low, has been edging up, and many are still closely watching the mainland real estate problems, he said.

On the other hand, sales of Oahu's $5 million-plus market thrived in November as the strength of Hawaii's international market and buyers from the U.S. East Coast.

The November sale of an $11.25 million luxury estate in Kahala to a buyer from Japan is the latest evidence that the Islands' luxury home market is robust.

"I'm seeing more activity from the international market," said John Riggins of John Riggins Real Estate. "I'm getting nibbles from buyers from all over the world. Many of them have money to burn because their economies are doing well and the exchange rates are good."

Oahu Home sales

The number of homes sold on Oahu in November with the median price and percentage change from the same month last year:

HOMES SOLD
November 2007	245
November 2006	293
Change	-16.4%
MEDIAN PRICE
November 2007	$610,000
November 2006	$610,000
Change	0.0%
CONDOS SOLD
November 2007	379
November 2006	421
Change	-10.0%
CONDOS SOLD
November 2007	$315,000
November 2006	$310,000
Change	+1.6%

Source: Honolulu Board of Realtors