Buyers sigh, but pay more to get less for O'ahu homes

By Michael Tsai
Advertiser Staff Writer

The lot is a tad smaller than he would have liked and the house itself could certainly use some fixing up, but — Hawai'i's housing market being what it is — Gordon Otani is fairly certain he'll put together an offer for the Claudine Street home he toured yesterday.

Gordon Otani of Palolo says this house on Claudine Street is a little small, but he'll likely make an offer in O'ahu's tight housing market. Gregory Yamamoto • The Honolulu Advertiser

Realtors and potential buyers say low interest rates are continuing to fuel an intense sellers' market, despite the fact that property costs have steadily increased.

The house at Claudine Street meets Otani's basic criteria with enough space for him, his wife, mother, sister, son and son's girlfriend. It's also in the right area, close to Kaimuki, where he grew up, and Palolo, where he and his family now rent a home.

Otani said he expects the four-bedroom/two bathroom house to sell for at least $400,000.

Clare Apana, the homeowner, said the final price will almost certainly be higher than that. As of last night, she had already received four solid offers.

"I was really shocked," she said. "I had no idea things were so crazy. It's kind of sad. I don't know how people will be able to afford to get a place to live."

Otani said he and his wife have been trolling the real estate waters for the past two years. Although the amount they're qualified to pay has remained the same, the costs of houses they're interested in are slowly being priced out of their reach.

"We've made many offers, and many were rejected," Otani said. "There are so many investors and that's what's killing guys like us.

"The asking price and what you have to do is outrageous," he continued with an exasperated chuckle. "People throw on a coat of paint and the price goes up $50,000."

Otani said he'd prefer not to have to expand his search past Halawa, but he acknowledged that — long rush-hour drives notwithstanding — the sanest housing costs usually lie west of Honolulu.

That's the same conclusion Lauren and Ron Tulba arrived at during their own yearlong quest for a starter home. The Tulbas are looking for a small family home for less than $300,000.

"It's depressing," said Lauren Tulba, 24. "You see things that you want but can't get. Because the interest is low, people are jacking up the prices."

Yesterday, the Tulbas visited Gentry Homes Ltd.'s Las Brisas development in 'Ewa. They liked the model homes and the surrounding neighborhood, but even assuming the couple can secure the proper financing, their chance of landing one of the prized lots isn't great.

"We've been to every model home in Waikele and Mililani," Tulba said. "It's hard because everything is a lottery nowadays."

A Gentry representative said that on average, there's been a 5-to-1 ratio of lottery applicants to lots at Gentry's 'Ewa developments.

Still, Tulba said she and her husband will keep applying and hope for the best.

And they hope the best comes soon. The Tulbas have a 4-year-old daughter, Emree, and another child due in September.

The Tulbas might look to Greg Oyape for inspiration. Oyape, 41, was one of eight lucky people whose lottery numbers were called on Saturday for Gentry's nearby Tiburon development.

"I heard there were about 80 applicants," Oyape said. "There were at least 50 who showed up for the lottery.

"I was No. 6," he said. "It was pretty disheartening for the people who were, like, No. 30. There'd have to be 20 cancellations for them to get a shot. A lot of people started walking away when they got to No. 20."

Oyape said he, his wife and two daughters live in a Navy housing unit, "paying $1,800 for a home built in the '40s."

They started house hunting in December and quickly learned that market conditions aren't in their favor.

"It's nuts," he said. "Everything is so inflated. It kind of bums me out. I don't think it will come back down."

Oyape said his ability to close a deal was hampered by the differences between sellers' asking prices and "comps," the assessed value of comparable lots in the area determined by lending institutions.

"You have to make up the gap yourself," he said. "We had only $20,000 to play with, and that wasn't much. Guys who bought places two or three years ago and had the value of their properties appreciate are the ones who are selling now and walking away with $100,000 in their pocket. They're the ones who can pay the difference."

Oyape said he also learned how quickly properties can disappear from the market.

"There was house in Mililani we were interested in but it was showing on Easter Sunday and we were having (an Easter party) at my place," he said. "I called my broker the next day, but it had already sold."

Still that missed opportunity may have worked out in Oyape's favor. By winning the Tiburon lottery, he was able to get a four-bedroom, two-bathroom home for $315,000, considerably less than the $400,000 he expected to pay for a similar home.

Buyers are so intent on securing a house that even competition for serious fixer-uppers has become intense.

Cindy Glor, a real estate associate with Coldwell Bankers, spent yesterday greeting a steady stream of potential buyers interested in a charming three-bedroom home on Ka'au Street in Palolo that looks every bit of its 74 years.

The property, which sat empty for five years before its owners decided to sell it, has gone to escrow three times unsuccessfully. It's nine days away from finally clearing, though the sellers asked Glor to continue showing it until everything is final — this despite the fact that there are two standby buyers waiting in the wings.

The corner lot is across the street from a park, in a neighborhood whose property values have risen over the past year. Still, warped floorboards and extensive termite damage indicate the need for a massive renovation if not a complete leveling and new construction.

Still, Glor said the deal in the works exceeds the sellers' asking price of $398,000.

"And with all the offers and inquiries I got," Glor said, "I probably could have sold this house 200 times over."