Inventory of available homes — or more accurately the lack of inventory — is what drives prices in Oahu’s residential housing market. When available inventory (supply) is down, demand drives prices upward. And in Hawaii, with an ever-present flow of people wanting to live here, and finite space,  demand continues to outpace supply.

Despite the year-over-year decline in sales volume in May —  due to the COVID-19 pandemic — significant inventory shortages pushed single-family prices up, while days on the market dropped dramatically, according to data collected by the Honolulu Board of Realtors®.

“We have already seen inventory drop significantly. And while unit sales have also dropped, the lack of sufficient inventory has kept prices stable ” says Kalama Kim, principal broker at Coldwell Banker Pacific Properties. “The low inventory has also caused a huge decrease in median days on the market, which is down to 13 days for single-family homes.”

Year-over-year statistics released this week indicate a significant drop in new listings, tightening the market further, in both single-family and condo segments, down 37.3% and 29.9%, respectively.  The total number of currently available active single-family home listings is also down 21.8%. But the number of active condo listings is only down 4.6% — from 2,350 condos listed for sale in May 2019 to 2,242 condo listings last month. Pending sales also took a tumble, when compared to May 2019. SF home escrows dropped by 11.7%, and condo escrows were down a whopping 44.4%.

While the COVID-19 outbreak put a large dent in sales activity, according to HBR, 30% of the properties taken off the market in March or April were already put back on the market by the end of May. From April to May, total new listings increased 17%, while the volume of escrows opened (pending sales) increased 32%.

“Mini shifts in demand for housing and new listings on the market happen each time the local government takes an additional step to open up the economy,” says Kim. “As people gain confidence that it is safe and permitted to venture out of their homes, real estate activities increase.”

Kim adds that today’s buyer still wants the American dream of homeownership and, as buyers were prior to COVID-19, they are motivated by the extremely low mortgage interest rates.

The 30-year fixed mortgage rate also hit another record low at the end of May, averaging 3.15%, and according to the Mortgage Bankers Association, mortgage applications continued trending upward with applications up 54% nationwide from early April to late May, and up 18% from a year ago.

 

Sales of Single-Family Homes and Condos | May 2020

Source: Honolulu Board of REALTORS®, compiled from MLS data

The number of closed single-family homes in May was off 22.5% from last year — from 320 closings to 248 last month. Condo closings were down 51.2%.

Year-to-date data isn’t quite as bleak. Year-to-date, 1,311 single-family homes closed after the first five months of 2020, compared to this time last year, when 1,368 homes closed — a drop of only 4.2%.

Condo year-to-date figures are also less glum, down 19.3% — from 2,110 a year ago, to 1,702 units closed in the first five months of this year.

“The year-over-year stats are what we expected — the number of sales were down and median prices remained relatively steady, due in large part to lower than usual inventory and continued high demand,” says Tricia Nekota, president Honolulu Board of Realtors®. “As the state continues to reopen, we are already seeing a steady increase in activity that, in turn, helps to drive our local economy.”

 

Median Sales Price of Single-Family Homes and Condos | May 2020

Source: Honolulu Board of REALTORS®, compiled from MLS data

 

Amid all the COVID-19-related upheaval, demand for real estate on Oahu remained strong in May. The median sales price for a single family home in May was up 3.5% from last year — from $770,000 in May 2019 to $797,000 this year. Year-to-date, the MSP was also up — from $775,000 to $789,000.

Condos prices have remained steady. The median price of a condo in May was down 4.4% — from $417,500 in May 2019, to $399,000 last month. But year-to-date, condo MSP is up 3.4% — from $415,000 during the first five months of 2019, to $$429,000 during that same five-month period in 2020.

 

NEIGHBORHOOD MARKET STANDOUTS

With significant decreases in inventory, pending sales, and closed sales, prices on Oahu remain steady. And we have found some hot spots on the island for our neighborhood standouts: Neighborhoods where year-to-date prices were up 9% or more. Take a look.

Single-family YTD MSP 2020 YTD MSP 2019 % Increase
Aina-Haina — Kuliouou $1,287,500 $1,100,000 17%
Kailua — Waimanalo $1,171,500 $1,024,000 14%
Kalihi — Palama $   860,000 $   755,000 14%
Makakilo $   780,000 $   699,000 12%
Moanalua  — Salt Lake $   902,500 $   763,200 18%
North Shore $1,064,000 $   894,000 19%
 

 

Condos
Ala Moana — Kakako $   697,500 $   625,500 12%
Kapahulu — Diamond Head $   600,000 $   525,000 14%
Makiki — Moilili $   388,000 $   355,000 9%


SOURCE: Honolulu Board of REALTORS® , compiled from MLS data.