Condo prices drop for second time in three years

Home sales volume on Oahu retreated for the 10th consecutive month in November, with rising interest rates likely to blame, according to the Honolulu Board of Realtors.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.90% in October, up from 6.11% in September and significantly higher than the average commitment rate of 2.98% across all of 2021.

While commitment rates are secondary market rates at which mortgage loans can be sole to another entity, they drive consumer loans. Bottom line: the same home loan a year ago will cost a lot more this year and may upend homebuying plans for some.

“More potential homebuyers were squeezed out from qualifying for a mortgage in October as mortgage rates climbed higher,” says Lawrence Yun, National Association of Realtors® chief economist. “The impact is greater in expensive areas of the country and markets that witnessed significant home price gains in recent years.

“Inventory levels are still tight, which is why some homes for sale are still receiving multiple offers,” Yun added. “In October, 24% of homes (nationwide) received over the asking price. But, conversely, homes sitting on the market for more than 120 days saw prices reduced by an average of 15.8%.”

According to the National Association of Realtors®, first-time buyers comprised 28% of nationwide sales in October, down from 29% in September 2022 and October 2021. In addition, properties typically remained on the market for 21 days in October, up from 18 days in October 2021.

On Oahu, properties remained on the market for a median of 18 days in November, roughly twice as long on the market compared to November 2021.

Although new listing volume fell on Oahu across the board, active inventory remained steady, consistent with the national trends.

Notably, the number of single-family homes and condos on Oahu that sold above the original asking price dropped significantly, down 73% and 68%, respectively. Additionally, a greater number of active listings underwent price adjustments in November 2022 — approximately 46% of SF home listings and 36% of condo listings.

Sales of Single-Family Homes and Condos | November 2022
Source: Honolulu Board of REALTORS^®, compiled from MLS data

According to the Honolulu Board of Realtors®, Oahu’s single-family home sales declined 48.2% year-over-year in November — from 371 homes closed in November 2021 to 192 last month.

Condo sales volume was down 43.4% — dropping from 601 units closed in November 2021 to 340 last month.

Closed sales in both markets declined across most price points, with SF homes in the $700,000 to $1,099,999 price range accounting for the most significant decrease, down 55% from a year ago. Condos in the $400,000 to $699,999 range dropped by 50% compared to a year ago, while properties in the $2 million-and-above range doubled.

Geographically, both markets in the Ewa Plain — down 64% and 65%, respectively for SF and condos — and Metro Oahu regions — down 54% and 43%, respectively — accounted for the most significant declines in closed sales.

Median Sales Price of Single-Family Homes and Condos | November  2022
Source: Honolulu Board of REALTORS^®, compiled from MLS data

The median sales price of a single-family home was $1,149,500, a gain of 9.5% from November 2021 when the MSP was $1,050,000, marking the 16th consecutive month over $1 million.

The median sales price of a condo was down 4% — from $500,000 in November 2021 to $480,000 — only the second year-over-year drop since September 2019, and the first time the condo MSP fell below $500,000 since February, perhaps giving first-timers an opening.

Considerably pockets of single-family home inventory were available at all price points, with properties in the $600,000 to $999,999 range reaching a 175% boost year-over-year. Condo supply fluctuated across price margins, although properties between $400,000 and $1,999,999 were up 45%. Condos priced below $400,000 and above $2 million were down 11% and 17%, respectively.

NEIGHBORHOOD MARKET STANDOUTS

Median sale prices have been rising quickly in the last eight years. And while rising rates are affecting sales volume and prices, there are still neighborhoods where prices are up by more than 8%.

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

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