Home sales hit new high
By Andrew Gomes
Advertiser Staff Writer
Residents, visitors and investors spent $3.5 billion buying previously owned homes on O'ahu last year, shattering the record by nearly $1 billion and capping a seventh year of expansion driven by low interest rates.
The year-end results, released yesterday by the Honolulu Board of Realtors, marked a new high for condominiums and single-family homes sold, and a new low for available inventory. Median prices reached a peak for single-family homes, but not for condos.
"It's staggering," said John Harris, a local broker and president of RE/MAX Honolulu. "There is all this momentum."
Market experts are confident market expansion will continue this year, despite double-digit sales growth and interest rates that hit 40-year lows last year.
Observers predict the positive cycle will continue for an eighth year because of relatively small increases anticipated in mortgage rates, a strong state economy, rising personal incomes and a modest rise in home prices that in some cases are still lower than they were 10 years ago.
"I don't think there's any doubt you're going to see a strong 2004, both in terms of volume and prices," said C. Scott Bradley, managing director of Coldwell Banker Pacific Properties, the state's largest residential real-estate firm. "It's a very strong market."
Harvey Shapiro, research economist for the Realtor board, agreed that last year's fundamental market strength should prevail again this year.
In 2003, there were 4,419 single-family homes and 6,907 condominiums sold, increases of 13.1 percent and 27.8 percent, respectively, over the 3,906 single-family homes and 5,406 condos sold in 2002.
The median sales price — meaning the point at which half the homes sold for more and half for less — was $380,000 last year for single-family homes, an all-time high and 13.4 percent above $335,000 in 2002.
The median condo price last year was $175,000, up 15.1 percent from $152,000 the previous year, but still lower than median prices that peaked in 1992 and 1993 at $193,000, according to board records.
Sales volume last year reached $3.54 billion, up 35.1 percent or $918 million, from $2.62 billion in 2002.
Prices were higher every month last year than the same month of 2002. Sales volume slipped only twice, in April and October, when there was a combined decrease of six single-family home resales.
December data, also released yesterday, showed a 9.2 percent increase in single-family home resales, to 379, compared with 347 sold in December 2002. Condo resales rose 19.7 percent to 583, compared with 487 in the year-ago period.
For home buyers, the combination of rising sales prices and shrinking inventories is making the hunt for a place to buy increasingly difficult.
The median single-family home price in December was $399,000, the second-highest of the year and markedly higher than the $350,000 median in December 2002. The median condo price was $180,000 last month, tying the second-highest price of last year and up from the $160,000 year-ago median.
At the end of the year, the number of homes available for sale was 891 single-family homes and 1,347 condos, roughly 300 fewer in each category than at the end of 2002 and lower than any year since the board began keeping records in 1985.
Harris of RE/MAX Honolulu said low supply would be one key factor pushing up prices if demand continues.
"Supply is real short, and we don't have a lot of people who want to sell or need to sell," he said.
There may be some supply relief, however, as hundreds of new homes built last year are added to the pool of homes potentially put on the market for resale this year.
On the demand side, there should be some relief as new-home construction, including more than 1,000 condo units, compete with sellers of existing homes.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
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