Attractive Interest Rates and High Buyer Demand Have Taken the Hawaii Real Estate Market by Storm
Living on islands, Hawaii residents are used to paying high prices for everything from gasoline to groceries. Nonetheless, watching the price of housing continue to climb month after month — as it did again in October — is remarkable. And while one prominent local economist was quoted several months ago saying he believed the median price of a single-family home on Oahu would climb to $1 million before the decade was over, the Honolulu Board of REALTORS® statistics for October show single-family homes inching closer and closer to the $700,000 mark for 2014. And nearly as shocking as the median price surge, is the seemingly endless numbers of buyers who are willing to pay those high prices (as evidenced by the bidding wars and above-asking offers — see HOT MARKETS below).
Patti Nakagawa, REALTOR® and Branch Manager at Coldwell Banker Pacific Properties, comments on where buyers are coming from.
“Although we do have a significant amount of buyers from the U.S. Mainland, Canada and Asia, most of our buyers are local,” says Nakagawa. “Those who currently have equity their properties may benefit from leveraging that equity into a higher priced and better quality property. Others may have been taking their time in making a purchase and have saved for a down payment on their home. History suggest that prices may appreciate over the long term, so the longer someone waits, the more difficult it may become for them to qualify for the home of their dreams.”
Historically attractive mortgage interest rates continue to allow first-time homebuyers purchase homes.
“Many first timers purchase on the west side, where you can put little or nothing down (USDA loans are with zero down),” says Kalama Kim, REALTOR®, Branch Manager and Principal Broker at Coldwell Banker Pacific Properties “The influx of military personnel continue to purchase because they have confidence in the market. Their VA loan benefits and housing allowance is very attractive.”
Sales of Single Family Homes and Condos as of October 31, 2014
Source: Honolulu Board of REALTORS®
The number of single-family homes that closed in October was up with 298 sales closed in October, as compared to 290 in the previous year — up 2.8%. Year-to-date sales volume figures are up 1.8% — meaning that even though 2013 was a record year, 2014 could be even better. Stats show sales volume to be brisk in the condo market as well. For October, 448 condos closed escrow — a 6.9% increase over last year when 419 units closed. And condo sales for the year are also up .2%.
In the Ewa Plain, the most recent stats show an astounding 62 single-family homes and 35 condos closed escrow. Twenty-six single-family homes closed in Kailuaand 21 in Makaha.
On the North Shore, 17 homes closed — a two-year record high for the neighborhood. Wahiawa’s 10 closed sales ties the two-year high — as well as a two-year high for median prices in the neighborhood at $550,000.
In October, the median price for a single-family home on Oahu rose 7.8% to $690,000, a significant jump from $640,000 in October of 2013. More impressive, island-wide condo median prices were up 8.5% to $352,750. And as if sellers aren’t happy enough to see prices going up, it is also impressive to note that the percentage of original list price received is 97.6% (single-family), and 96.6% (condos).
The most recent stats provided by the Honolulu Board of REALTORS® reported condos in Kaneohe broke the $500,000 mark, hitting $510,000. Single-family homes in Mililani broke $700,000 for the second time in two years.
For the median price of $690,000, Nakagawa says, “You can get a newer home in west Oahu, in neighborhoods like Makakilo or Ewa. For single-family homes in town, it will more likely be an older home. For example, a 1950s home in Palolo, or a home built in the ‘60s in Pearl City, or a 1970s home in Mililani.”
Kim says, “The median condo price ($352,750) will buy a townhome in Makakilo built in the 1980s with approximately 1,200 square feet and three bedrooms, or a new two bedroom townhome in Kapolei.”
This month’s hottest markets are the neighborhood’s where sellers received 100% (or more) of their original asking price. Note: Makakilo sellers — single-family and condo — impressively made both lists!
Aina Haina – Kuliouou: 100%
Kailua – Waimanalo: 101.8%
Kapahulu – Diamond Head: 102.2%
Makiki – Moiliili: 109.1%
North Shore: 100%
Kalihi – Palama: 102.4%
“Home values are affected by supply and demand,” says Nakagawa. “Sellers who have homes in the most desirable neighborhoods and price ranges are still getting multiple offers when putting their home on the market.”