Single-family home prices at record high and counting

By Andrew Gomes
Advertiser Staff Writer

Intense demand and falling supply pushed the median price for an O'ahu house to $400,000 last month, a record that industry experts predict will be broken again and again this year.

"Every weekend, we'd look in the paper and just couldn't believe some of the prices (sellers) were asking," said Brad Gushiken, a local attorney who bought a new house in Hawai'i Kai with his wife in December.

Just a year ago the median price for a previously owned single-family house was $350,000, and some economists predict it will rise to as high as $600,000 in the next few years.

Condominium prices are on the same trajectory. The median price for a previously owned condo was $187,000 last month, just $21,000 shy of the $208,000 high mark reached in October 1990, according to a Honolulu Board of Realtors report yesterday.

Harvey Shapiro, board research economist, said no particular part of the island is responsible for increasing prices. "I'd say the entire island has been pretty much booming," he said.

Herb Conley, managing director of Coldwell Banker Pacific Properties, said the $400,000-plus house is still "affordable" based on an estimated 4 percent to 5 percent rise in median household income and projected interest rates between 6.1 percent and 6.4 percent.

"If you take into account the median household income for a four-person family, the median home price and the 30-year mortgage rate for (past years), houses in Hawai'i are more affordable now than ever," he said.

Last July, Bank of Hawaii chief economist Paul Brewbaker said the single-family home median price could rise to around $600,000 in the next few years and still be considered affordable assuming 3 percent annual income growth and a 7 percent interest rate.

Today's prices have passed the peak resale median for houses during the market's last expansion cycle — $392,000 in August 1990. The median price is the point at which half of all sales are higher and half are lower.

The high prices haven't put a damper on the number of homes sold. Last month 342 previously owned single-family homes were sold, up 23 percent from January 2003. For condos, the volume was up 17.2 percent, to 558 from 476 in the same period.

Total dollar volume last month was nearly 50 percent higher at $308 million, up from $207 million in January 2003.

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.