Prices drop, interest rates dip, giving rise to buying opportunities

After 17 consecutive months of Oahu’s home prices exceeding $1 million or more, the Honolulu Board of Realtors® reports the median price of a single-family home fell short of the million-dollar mark in January — due in part to the sharp increase in mortgage interest rates. In addition, the Oahu condo MSP, which has been oscillating around the $500,000 mark, also fell in January.

According to HBR, at the end of the month, average mortgage rates continued to hover in the low 6% range, roughly 2.5 points higher than this time last year. Still, since December, mortgage rates have drifted slightly down, and coupled with lower prices may offer new opportunities for buyers.

HBR also reports that single-family home sales volume across all price points has declined. However, sales volume in the $1.5 million and above range sustained the sharpest drop — plummeting 73%, year-over-year. So many fewer sales in this high-end segment of the market could easily have contributed this month’s decline in the SF median sales price.

Also giving renewed hope to buyers, active inventory is up compared to 2022 — up 77.2% in the single-family home market, and up 23.7% in the condo market.

In January, nearly 37% of single-family homes closed at the full original asking price or more, compared to 73% of sales last January. The same is true for condos, where roughly 39% of those sales closed at the full original asking price or more, compared to 57% in January 2022.

Mike James, president of Coldwell Banker Realty, says “While the cost of financing a home is up, and inflation has put a dent in spending, some buyers have retreated, resulting in less competition for listings, and fewer bidding wars. Therefore, these market conditions offer some stability to the market as rates and prices inch down and can indeed be seen, for some buyers, as an opportunity. The time is right to get with a loan officer, re-crunch the numbers and refresh your search.”

Sales of Single-Family Homes and Condos | January 2023
Source: Honolulu Board of REALTORS^®, compiled from MLS data

The number of closed sales on Oahu in January fell significantly from a year ago. Single-family homes dropped 54% — from 326 homes that closed in January 2022 to 150 last month — and condos fell 50.2% — from 552 a year ago to 275 closings last month.

Across Oahu, no designated regions experienced positive sales growth for SF homes, however, Kaneohe and Pearl City sales volume was unchanged from a year ago. Most regions recorded significant declines of 50% or more, with the Ewa Plain reporting the most notable decrease of 70.7%.

In the condo market, while the bulk of sales occurred in the Metro region, this was still a 48.1% drop in sales, compared to January 2022. The Central region, spanning from Mililani to Wahiawa, also reported a significant drop of 60.4% in the number of sales closed.

Median Sales Price of Single-Family Homes and Condos | January 2023
Source: Honolulu Board of REALTORS^®, compiled from MLS data

January 2023 median sales prices dipped, possibly indicating that the pandemic-induced buying frenzy may be over.

The median price of a single-family home is down 7.6%, from $1,050,000 in January 2022 to $970,000 last month. However, the impact of a 73% drop in sales volume in the category of homes in the $1.5 million and up may account for the lower median price.

For example: in the $1,500,000 to 1,999,999 price range, 45 homes sold in January 2022 compared to 13 homes in that range last month. Of homes priced from $2 million to $3 million, 15 sold in 2022 and only 2 sold last month.

Condo median prices are down a more modest 2.9%, from $510,000 in January 2022 to $495,000 a year ago. A noteworthy condo statistic: Condos priced from $1.5 to $2 million took a median of 6 days to sell in January 2022. Last month, the median days on the market for a condo in that price range skyrocketed to 321 days.

The percentage of original list price received statistic was down in both single-family homes and condos — to 95.9% and 98.4%, respectively.

NEIGHBORHOOD MARKET STANDOUTS

The volume of closed sales was down significantly in both single-family and condos. With a few exceptions where there were more closed sales in December than there were in December 2021 — Wahiawa’s single-family home sales, and Makakilo’s and Windward Coast’s condo sales — the number of closed sales was down island-wide. The list below are regions reporting drops that were 50% or greater compared to a year ago.

To find out the MSP for your neighborhood, ask your Coldwell Banker Realtor®.

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