O'ahu home prices up 25%

By Andrew Gomes
Advertiser Staff Writer

It may not be far off when the typical single-family house on O'ahu costs half a million dollars, after last month's median sales price for previously owned homes rose to $439,000 — a wallet-popping $29,000 increase over February.

The jump represented a 25.4 percent gain, or $89,000, over a year ago when the median was $350,000, the Honolulu Board of Realtors reported yesterday.

"It's still a shock what your money gets you," said Dan Tabori, a former Silicon Valley software executive who moved to Hawai'i in November and became executive vice president of business operations for Prudential Locations.

Tabori found a home in Kailua that had fallen out of escrow, put in an offer the day after he saw it with his wife, and completed the sale on Tuesday. The price was close to $600,000, but he said the house was one of the best values in the area at the time.

"There really isn't much to look at," said Tabori,

The numbers bear that out. Single-family home inventory dropped to 800 last month, the lowest number since the board began keeping records in 1986.

Homeowners who put their property on the market are asking more and taking advantage of the dwindling supply and low interest rates that are enticing buyers to pay more.

Harvey Shapiro, research economist for the Honolulu Board of Realtors, cautioned against assuming any trend from the single-month increase.

"One month to the next can be more about where the homes were sold and what type of homes were sold," he said.

Shapiro said the March sales price rise occurred around the island, from East to West O'ahu, but more detailed information by neighborhood and property type was not available.

Two years ago the median home price jumped from $317,000 in April, to $360,000 in May, but then settled back to $330,000 in June, Shapiro noted.

Shapiro said there were 504 homes added to the inventory for sale last month, and the median asking price for the new listings was $499,000. That compared with a $459,000 median asking price for homes put on the market in February. The median is a point where half the sales were higher and half lower.

The higher prices did not stymie sales. There were 348 single-family homes sold last month — the highest ever for that month — and a 6.4 percent increase over the 327 homes sold in March 2003.

O'ahu's condominium market expanded with more sales at higher prices. There were 606 sales of previously owned condos, up 7.4 percent from 564 in the same month last year.

The median condo price in March was $190,000, up from $188,000 in February. A year ago the median price was $169,100. There were 1,053 condos on the market last month.

Some real-estate analysts predict that if inventory continues to shrink, or if interest rates rise significantly, it will put the breaks on sales. But others doubt that rates will rise enough or inventory will fall enough to chill buying this year.

The average rate for a 30-year mortgage this year has come down from 5.87 percent during the week ending Jan. 8, to a year-to-date low of 5.38 for the week ending March 18, according to Freddie Mac. Yesterday the rate shot up to 5.52 percent in response to a strong jobs report.

Even that is not likely to quell home buying, said David Berson, chief economist at Fannie Mae, the No. 1 mortgage buyer. Fixed rates probably will remain below 6 percent, averaging 5.8 percent for the year, because inflation is expected to remain low, he said.

"If we don't break last year's (national) home-sale record, we're going to come awfully close," Berson said.

The Honolulu Board of Realtors also released quarterly figures yesterday. For the first three months of the year, there were 983 single-family home resales and 1,613 condo resales, which represented increases of 12.5 percent and 9.5 percent, respectively over the same period last year.

The median resale price during the first quarter was $430,000 for single-family homes, and $190,000 for condos. Total dollar volume of sales in the quarter was $907 million, up 37 percent from $662 million in the year-ago period.

Bloomberg News contributed to this report. Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.

• • •