Isle housing bottom seen


POSTED: Friday, April 03, 2009

Could Oahu's declining housing market finally be turning a corner?

Conventional wisdom always has held that the only sure way to identify that a market has hit rock bottom is to get past it. However, despite continuing weakness in Oahu's housing market in March, there were signs last month that the worst could be over.

“;I'm going to go out on a limb here and say that we may be close to a bottom,”; said Harvey Shapiro, research economist for the Honolulu Board of Realtors.

While sales and prices continued to shrink from the previous year in March, the monthly median price of a single-family home moved back to the $600,000 level for the first time this year, according to HBR data released yesterday.

“;The first two months of this year were disastrous and I thought we were going to follow the mainland into the toilet, but instead of continuing south, the market picked up and I'm hearing that people are out there looking who want to buy,”; Shapiro said.

That said, Shapiro is loath to pinpoint the exact moment that Honolulu's market will begin climbing again. Just like any other Hawaii-based economist, Shapiro says that changing factors such as consumer confidence, unemployment and financial liquidity are making “;the crystal ball murky.”;

Yet, while Shapiro is still quick to say that “;it's an awfully weak market,”; there are other factors aside from the monthly climb in price that give him cause for optimism, he said. For starters, the pace of real estate sales sped up substantially, indicating that the market is strengthening, Shapiro said.

“;The faster the market, the quicker people are deciding to buy,”; he said.

The median number of days that it took for a single-family home to sell in March fell to 48 days, Shapiro said. In February, the median pace was 69 days and the year prior to it was 47 days, he said.

Likewise, condominiums took a median of 47 days to sell in March as opposed to 70 days in February and 39 days the year prior, Shapiro said.

The lack of inventory buildup on Oahu is another sign that island real estate is probably not readying for more steep drops, he said.

“;An inventory buildup has been a key factor in all the markets that have taken a dive, but that is not happening here,”; Shapiro said.

In March, the remaining inventory of single-family homes dropped to 1,901 from the month-prior 1,928 and the year-prior 1,919, he said. Similarly, there were 2,582 condominiums left on the market in March as opposed to 2,507 in February and 2,581 in March of 2008.

“;Both single-family home and condominium inventory are within units of last year's levels,”; Shapiro said.

March's performance should have outpaced the earlier months of this year when sales are historically lower, so it's too soon to say whether or not the pickup is seasonally related or part of a trend line, said Dan Tabori, executive vice president for business operations for Prudential Locations LLC.

“;It's going to take a few months to show a trend and this is really the first month that we've seen a pickup,”; Tabori said. “;There are some decent fundamentals, but consumer confidence is still shaky.”;

Buyers are continuing to bottom fish in what is clearly a buyer's market, and many are still hesitant to make a purchase, said John Riggins, owner of John Riggins Real Estate.

“;Consumer confidence is at a 25- or 26-year low and savings rates have risen to plus 5 percent from a negative 3 percent in September,”; Riggins said. “;People are concerned about their future.”;

Consumers who are waiting the market bottom to buy may find that it has passed before they realize it, said Chason Ishii, president of Coldwell Banker Pacific Properties.

“;I personally don't think that we'll see a clearly defined bottom,”; he said. “;It's going to be sloppy. Some months we'll see improvement, some months we'll see it fall.”;

Inventory levels are stable and there's a lot of activity right around the median price, so the median price is not likely to change much, Ishii said.

“;Forty-eight percent of the single-family homes sold last month were under $600,000,”; he said. “;That's a huge percentage, so that's why the median sale price didn't really move.”;


Home sales

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




March 2009188
March 2008282

Median price

March 2009$600,000
March 2008$628,000



March 2009248
March 2008392

Median price

March 2009$305,000
March 2008$329,300

Source: Honolulu Board of Realtors



Oahu single-family home and condominium resales data for December by neighborhood with the percentage change from last year:



No. Neighborhood groupSales PCT. changeMedian pricePCT. change
3Kapahulu-Diamond Head2222.2%$740,0009.2%
5Aina Haina-Kuliouou4-42.9%$745,000-25.5%
6Hawaii Kai14-44.0%$750,000-10.7%
9Windward Coast2-71.4%$612,500+9.4%
10North Shore2-50.0%$610,000-45.7%
14Ewa Plain32-20.0%$466,500-0.5%
17Pearl City-Aiea10-52.4%$585,000-21.3%


No. Neighborhood groupSales PCT. changeMedian pricePCT. change
18Moanalua-Salt Lake11-59.3%$365,000+30.4%
21Ala Moana-Kakaako27-28.9%$250,000-54.5%
25Hawaii Kai15-16.7%$520,000-0.8%
28Windward Coast1N/AN/AN/A
29North Shore4-20.0%$332,000-21.0%
33Ewa Plain15-48.3%$350,000+37.3%
36Pearl City-Aiea16-40.7%$256,300-21.1%

Source: Honolulu Board of Realtors