Single-family home prices nearing $900,000 mark

As Oahu’s housing market shifts into the fourth quarter of 2020, sales activity and prices continue to reflect unforeseen and surprising influences brought about by COVID-19.

Single-family home sales and prices are up, prompted by a severe inventory reduction and real need for more living space. Conversely, condo sales have suffered, possibly due to a virtual absence of out-of-state buyers.

“The spike in demand for single-family homes may correlate to buyers’ pursuing a different quality of life and new environment following the sharp shift in people working from home,” says Tricia Nekota, president, Honolulu Board of Realtors®. “Ultimately, the COVID-19 pandemic has changed how buyers think about purchasing a home, causing them to reevaluate their housing goals and priorities.”

The Honolulu Board of Realtors® most recent statistics note that sales of larger homes, particularly those with more than 2,000 interior square feet of living area, increased by 37.9% from last year.

HBR reports the volume of single-family sales under $700,000 dropped 36.3%, while those in the $700,000 to $1,499,000 range were extremely active with 74 more sales — a 39.4% increase —compared to this time last year.

Additionally, SF home sales in the $1.5 million-and-above range increased by 42.9% year-over-year. Notably, purchasing activity backed by VA loans surged 26.1%, compared to this period last year.

However, Kalama Kim, principal broker at Coldwell Banker Realty, points out condo market stats tell a different story.

“The condo and second-home markets are trailing well behind last year,” adds Kim. “Since COVID-19 shut down most of the transpacific travel in Hawaii, properties that attract out-of-state buyers have suffered. Over the next few months, we will find out if that will change with the strict quarantine requirements loosening.”

Unemployment locally, has also affected some market segments.

“Even though a large segment of the market is in expansion, markets that typically attract those employed by businesses affected by COVID have seen a dramatic drop in demand.”

But the severely depleted inventory levels, especially in the single-family home segment, has heightened demand. The total number of SF active listings available in September was 939, down 39.3% from September 2019, when 1,548 homes were on the market.

“There is a buying frenzy for single-family homes characterized by multiple offers on property sales resulting in bidding wars,” Kim says. “We are in an inventory crisis and desperately need more homes to hit the market to meet demand.”

“Right now, sellers are benefitting from market conditions that include historically low interest rates, a lack of inventory and stiff competition, often causing buyers to bid well over the asking price,” adds Nekota.

“Sellers are able to become more and more aggressive in negotiating price because of the high level of demand,” adds Kim. “Sellers can pick from sometimes dozens of offers on their property.” And he adds, “Buyers are taking advantage of unprecedently low mortgage interest rates and saving massively on monthly payments, making it an excellent time to buy if they are persistent.”

Sales of Single-Family Homes and Condos | September 2020
Source: Honolulu Board of REALTORS^®, compiled from MLS data

The number of closed single-family homes is at a two-year high — up 12.7% from September 2019, from 347 to 391 closed transactions last month.

Now, three quarters into 2020, the year-to-date number of closed transactions is slightly down — from 2,774 sales at this point in 2019 to 2,735 at the end of September.

Condo sales volume in September, while at a high for 2020, was down 2.1% — from 466 a year ago, to 456 last month. Year-to-date, the number of sales is down 18.9%, from 4,074 after the third quarter of 2019, to 3,305 at the end of September.

The median number of days on the market in both segments are at two-year lows — SF homes sold in a median of nine DOM, while condos sold in 21 days.

Median Sales Price of Single-Family Homes and Condos | September 2020
Source: Honolulu Board of REALTORS^®, compiled from MLS data

The SF home median sales price reached a record high of $880,000 with listings spending a record-low of nine days on the market. September was the seventh instance when the monthly MSP was more than $800,000, and the first time over $850,000 — the previous high was $839,000 set in August.

The MSP of a condo on Oahu remained steady at $445,000, exactly as it was in September 2019.

Year-to-date, both SF and condo prices are up. Single-family MSP up 3.3% year-to-date, and condo prices are up 1.2%.

NEIGHBORHOOD MARKET STANDOUTS

The big news this month is the single-family price record. The following list of standout neighborhoods recorded year-to-date, double-digit price increases.

Single-family	YTD MSP 2020	YTD MSP 2019	% Increase
Hawaii Kai	$1,197,500	$1,090,000	10%
Kailua-Waimanalo	$1,200,000	$1,090,000	10%
Makakilo	$780,000	$700,000	11%
North Shore	$1,079,500	$900,000	20%