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The Honolulu Advertiser

Posted at 12:07 p.m., Wednesday, September 4, 2002

Sales of condos soaring on O'ahu

By Frank Cho
Advertiser Staff Writer

Condominium sales on O'ahu surged nearly 30 percent last month to the highest level in more than a decade, fueled by strong demand among investors in a tight rental market.

Last month, 557 condominium units were sold the highest number of resales since May 1990, and 26 percent more than the same month last year, according to data released today by The Honolulu Board of Realtors.

"We're seeing a lot of first-time buyers coming out at this time because their rents have gone up so much and interest rates are so low, they can now pay their mortgage for about the same money as they were paying in rent," said Jim Mazzola, a vice president and principal broker for Coldwell Banker Pacific Properties in Kailua.

Mazzola said many of the buyers his agents are seeing had been stuck in their homes or condos for the past 10 or 11 years because of falling home values.

"Now they have equity, they can move on and up for little or no change in their monthly payments," he said.

Single-family home resales last month remained largely unchanged from a year ago, the board said. Realtors said 342 single-family homes were sold in August, up about 0.3 percent from 341 sales during the same month a year ago.

The median sales price, however, rose to $360,000, up 12.5 percent from the previous month and more than 17 percent from the same year-ago period.

The surge in local condominium resales mirrors a nationwide trend through the first six months of the year. According to the National Association of Realtors, condominium sales nationwide are 12 percent ahead of last year's pace.

The strong sales are also generating higher prices. Nationally, prices are up more than 14 percent over a year ago. That's roughly twice the price increase among single-family homes, the association said.

In Hawai'i, the average condo sales price was $150,000 last month, down slightly from the previous month but up 16.3 percent from the same month a year ago.

Experts say condos are attractive because owners are able to enjoy the benefits of owning a home at a cheaper price and without the worries about maintenance. Condo owners pay a fee to an association that takes care of such things as yard work.

But a tight rental market, which has started to drive up prices, is also pushing a lot of investors and first-time home buyers into the condo market.

"Investors are coming back into the market," said Harvey Shapiro, a research economist for the Honolulu Board of Realtors. "The cost of money is so low now that it is making it feasible for many people."

Shapiro said that as long as interest rates remain historically low, the trend in single-family homes and condominium sales should remain strong through the rest of the year.

"The stock market has been very poor," Shapiro said. "I think people could be taking out their equity and putting it into something more stable such as real estate."

With demand growing across all of the geographic areas of O'ahu, homes have been spending less time on the market and that has contributed to the increase in sales prices. In August, the average home or condo spent just 28 days on the market before a deal was made a pace not seen on O'ahu since the early 1990s, Shapiro said.

"We experienced a slight increase in inventory (in August) but, at the current sales rate, the months of inventory-remaining indicators were an extremely low 3.3 months for single-family homes and 2.7 months for condominiums," Shapiro said.

Despite the high demand and limited inventory, experts note that prices are still historically low for condominiums. The Board of Realtors said last month's median condo price of $150,000 is still well below the median price of $200,000 at the height of the Japanese investment bubble in 1989-1990.