O'ahu home prices at highest level in six years
By Frank Cho
Advertiser Staff Writer
Home prices on O'ahu skyrocketed last month to their highest level in more than six years, fueled by low interest rates and demand for larger and more luxurious homes.
The spike in prices did little to dampen sales, which also rose dramatically last month, and continued to propel a strong housing market that has been one of the few bright spots in Hawai'i's struggling economy.
Experts say the local real estate boom — which has seen prices and sales rising nearly every month for more than a year — will likely continue at least through the summer because the Federal Reserve is expected to keep interest rates low, inspiring more new buyers. Rates on 30-year mortgages are around 6 1/2 percent.
"The climate for housing sales continues to be fueled by historically low mortgage rates and, for the first time in many years, the expectation of property appreciation," said Guy Tamashiro, chairman of the Honolulu Board of Realtors.
According to the monthly survey released yesterday by the board, the median price of an existing single-family home rose to $360,000 in May, up 24.4 percent from $289,000 in May 2001. In all, 367 single-family homes sold in May, up 34.9 percent from 272 sold during the same month a year ago.
Condominium prices and resales also rose. The survey showed the median price for a condominium last month rose to $145,000, up 8.2 percent from $134,000 a year ago. In all, 468 condominiums were sold last month, up 17 percent from a year ago.
The spike in home resale prices could be a short-term phenomenon, Tamashiro said, but added, "there were noticeably more single-family home sales in higher price ranges recorded in May."
Tamashiro said sales of homes in the $500,000 to $700,000 price range accounted for 14.7 percent of all sales in May, up from between 8 percent and 10 percent over the past three months.
And for the first time since the board has been keeping records, the number of homes that sold in the $700,000 to $1 million range exceeded 20 — with 25 sales during the month.
"It's been extremely stressful," said Kelly Allen, a Realtor associate with Manoa Realty. "There's extreme demand and a lack of inventory. Homes are selling as soon as they come on the market."
Allen said about half of the home buyers she sees are investors, with many coming from the Mainland looking for a second home.
There is also a significant number of buyers looking to use equity from a condominium or small starter home to trade up to a larger house. "Many local people are buying up (in price)," Allen said. "You have a lot of first-time home buyers."
The average time on the market for single-family homes fell to 32 days, down about 20 percent from a year ago. Condos are spending about 39 days on market, largely unchanged from a year ago.
While the trends bode well for O'ahu home sellers, some buyers are facing increasing challenges with the rapidly dwindling inventory and higher prices.
"Right now I am working with three clients who are frustrated already," said Zenaida Lopez, a Realtor with West Oahu Realty.
Lopez said her clients have offered as much as $20,000 above the asking price for a home and were still outbid for the property.
For the year to date, there have been 1,493 single-family home resales, up 14.1 percent from the same period last year.
Condominium resales this year have totaled 1,970, up 14.8 percent from the same point a year ago.
Higher sales volume and rising median prices have pushed total dollar sales volume for the year through May to $927.8 million, up 20.4 percent from $770.8 million during the same period last year.
Ricky Cassiday, real estate market consultant for Prudential Locations, said the sales numbers show that people have confidence in their job security despite the economic and tourism downturn that has shaken the state since Sept. 11.
"If you get more price increases like this, it will choke off the number of sales," Cassiday said. "But when you have sales increasing and prices going up, that is just a good economy."
Reach Frank Cho at 525-8088, or at fcho@honoluluadvertiser.com.
