By LISA SCONTRAS
Custom Publishing Group

For the second consecutive quarter, the number of residential sales on Oahu went down, while median prices rose slightly, according to the Honolulu Board of Realtors.

Which is exactly what experts have been predicting.

“Our forecast today hasn’t changed much from six months ago,” says Bill Chee, president of Prudential Locations LLC. “We’ll continue to see a lower number of sales and slower rates of appreciation throughout 2006.”

Scott Higashi, executive vice president of sales at Prudential, adds that it was six months ago when the marketplace began to change.

“In October, sales volume fell below October figures in the year prior,” says Higashi. “That was the first time that had happened in years. So we began to watch it ... and it happened again in November and then again in December.”

Higashi says, however, that a lower number of sales does not necessarily equate to lower prices.

“What you really want to know is ‘What is happening in my neighborhood,’” says Higashi, who explains that is exactly why the Board of Realtors breaks down the island into neighborhoods and why Prudential has in place an extensive process for tracking and evaluating sales information in all the individual neighborhoods. “Some neighborhoods will continue to rise, some will level off and some will decline slightly.”

The neighborhoods that will continue to increase in value, according to Chee, are the ones with a universal appeal.

“The market is separating itself into a local and international playing field,” Chee says. “It has to do with the number of buyers that a property appeals to ... if anywhere in the world, people would buy a home in Kahala, then that market is likely to be more stable than somewhere where that may not be true.”

So while statistics like inventory and days on the market are still valuable market indicators, they don’t tell the whole story.

“Who cares if there are 10 percent less transactions if you find the house you want?” adds Chee.

Buyers and sellers are getting re-educated as to what to expect in this more stable, more normal market. National Association of Realtors President Thomas M. Stevens believes comparisons with market performance in the last five years may distort what people expect from housing as an investment.

“Sellers have to expect a little more time on the market,” says Higashi. “We went through a time when if it didn’t sell within two weeks, it was unusual.”

And buyers are readjusting their expectations as well. Buyers who believed the hype about a housing bubble and may be hoping for prices to drop may be disappointed.

“There is a bigger selection of homes for buyers,” Higashi says.

“And if it takes more time to sell, then it’s possible prices may go down in certain areas. But I don’t know of anyone who has ever won by sitting out.”

Consumers may need professional assistance to understand and negotiate the current market.

Other market influences include the baby boomers.

“That demographic isn’t going to change overnight,” says Chee, who believes boomers are going to fuel the market steadily for a long time. “Boomers are turning 60 now but they’re very different from our parents ... they’re still working out, falling in love and taking out 30-year mortgages.”

Overall, experts are interpreting reports that the market is taking some slower steps as positive and optimistic.

“The market is breathing,” says Chee. “That it won’t go up 25 percent this year is the sign of a good healthy market.”

Harvey Shapiro, research economist at the Board of Realtors, agrees.

“It means that the market is moving on a path toward stabilization,” he says.

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