Posted on: Tuesday, April 5, 2005

Median home price soaring

By Andrew Gomes
Advertiser Staff Writer

The dream of owning a single-family home on O'ahu grew a little more lofty for moderate-income buyers, as the median price for such a house last month jumped to $550,000 — a roughly $50,000 jump since the start of the year.

It was another record in a long string of price peaks as measured by the median, a point where half the sales prices are higher and half are lower, according to the latest statistics released yesterday by the Honolulu Board of Realtors.

The $550,000 median price for previously owned single-family homes sold last month was 25.3 percent more than $439,000 a year earlier, or 4.7 percent more than $525,500 in February.

Condominium prices did not reach a new high. At $230,000, the March median condo price was 21.1 percent higher than $190,000 a year earlier, but down 2.1 percent from $235,000 in February.

The year-over-year price increases continue to be driven by buyer demand combined with relatively short supply.

"Even with the higher interest rates, it hasn't really affected buyers per say, because (sellers) are still getting multiple offers on listings," said Harry Lee, vice president of O'ahu operations for Century 21 All Islands.

Many local real-estate industry professionals, including Lee, project that the median single-family home price will eclipse $600,000 this year given the pace so far this year.

Lee said that past and expected future price appreciation of homes has attracted strong interest from out-of-state investors seeking better returns compared with other types of investments, like stocks. "You can't beat it," he said. "People see it as a sense of security."

Meanwhile, residents seeking starter homes are increasingly having to turn to single-family homes farther west on the Leeward Coast or more centrally located condos.

"Rising prices have moved some purchasers from the single-family home market segment into the more affordable condominium category," said Harvey Shapiro, research economist for the Realtor board.

Shapiro said he expects this trend will continue, especially since interest rates have risen over the past several months to add to the cost of buying a home.

The average rate for a 30-year fixed-rate mortgage is just over 6 percent after rising nearly a half a percentage point since the beginning of the year, according to Freddie Mac.

The number of sales last month didn't increase as much as prices, with year-over-year single-family transactions rising 8.3 percent to 377, compared with 348 a year earlier. Condo transactions rose 11.7 percent to 677 in March, compared with 606 a year earlier.

The increase for single-family home transactions was a rebound from two previous months of year-over-year declines. Because the volume of sales tends to be seasonal, month-to-month comparisons are not particularly meaningful.

The market, however, is headed toward the heavy summer season when the bulk of transactions take place.

For the first three months of the year, there were 976 single-family homes and 1,772 condos sold, a 0.7 percent decline and 9.9 percent increase, respectively. Total dollar volume of sales in the first quarter was about $1.17 billion, 29 percent higher than $907 million a year earlier.

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