Prices for houses, condos soar on O'ahu
By Andrew Gomes
Advertiser Staff Writer
By Andrew Gomes
The median price for a single-family home on O'ahu soared to a record $640,500 last month, but industry observers predicted the rapid increase in prices will likely slow next year.
November sales prices, which also set a record median for condominiums at $305,000, continued to place home ownership beyond the reach of many residents, who have seen prices double over the last few years.
"The prices are ridiculous," said Curtis E. Lum, a stay-at-home dad who bought a single-family home in Salt Lake in July and is not surprised that prices have continued to ascend.
Last month's median sale price for single-family homes was up 31 percent from $490,000 in November 2004, and broke the previous record of $625,000 set in August, according to Honolulu Board of Realtors data released yesterday.
The median condo sale price was up 33 percent from a year ago and broke the previous record set in October.
The higher prices helped weaken demand, which resulted in 2 percent fewer homes being sold last month — 366 single-family homes and 614 condos — compared with November 2004.
"It doesn't surprise me," said Carol Iseri, principal broker at Properties Unlimited. "We've seen a very steady rise, and skyrocketing (of prices)."
Some local economists predicted that home prices will continue to rise next year, though at a significantly slower pace, with fewer home sales than this year.
"A review of current statistics would indicate that sales will probably continue slowing, but there is clearly still enough demand to push prices even higher in 2006," said Harvey Shapiro, research economist for the Honolulu Board of Realtors.
Iseri said she noticed a lot of price reductions by sellers last month, which she believes will lead to a leveling of prices perhaps in January or February.
"That indicates that we're nearing a more stable market," she said.
The median prices are based on sales that closed in November and there is generally a two- or three-month lag between buyers contracting to buy homes and sales closing. That means purchases agreed to in November generally won't be counted as sales until January or February.
Coldwell Banker Pacific Properties agent Bryn Kaufman early last month noted on his Web site that prices for about 400 single-family homes on the market had been reduced.
"It is becoming a buyer's market," Kaufman wrote on the site. "Sellers are finally realizing they will have to get more aggressive with their pricing in order to sell their property."
Lum, the recent homebuyer, said he agrees with economist forecasts that prices will continue to appreciate next year, but at a slower rate than this year's 30 percent rise.
Still, Lum said he has three friends who sold their homes and moved in with their parents in anticipation of market prices peaking and falling soon.
How the market changes in coming months largely depends on where interest rates move. The National Association of Realtors projects that the average interest rate for 30-year, fixed-rate mortgages next year will remain below 7 percent, still a relatively low level.
Local growth in jobs and income, plus investment demand from Mainland baby boomers entering peak earning and retirement years, can also be expected to maintain relatively robust prices and demand for Hawai'i homes.
Mary Flood, president of the Honolulu Board of Realtors and an executive with the local Schuler division of homebuilder D.R. Horton, noted that O'ahu home prices still compare favorably with some Mainland cities, such as San Francisco where the median home price is around $720,000.
"Until the mid-1990s, Honolulu ranked first in national surveys and was $100,000 higher than the second place city," she said.
In a display, though, of just how high O'ahu prices have risen, November's $305,000 median price for condos was more than the median price for singlefamily homes in 2001.
Last month's single-family home median price was more than double the $299,900 median price in 2001. The median means half the sales were for more and half were for less.
Just what a buyer can purchase for $640,000 varies.
Among homes on the market yesterday listed for $635,000 were a six-bedroom duplex in Makaha built in 1974 and a year-old 'Ewa Beach house with three bedrooms, a pool, a hot tub, a golf course view and $351 in monthly maintenance and community association fees.
The 'Ewa Beach home as of yesterday had been on the market 32 days. The Makaha home has been on the market since January.
Linda Bertsch, an agent with Wai'anae-based brokerage firm Hawaii Hatfield Realty, said interest in West O'ahu properties was stronger in November, with pending purchases of one single-family home for more than $2 million and oceanfront condos for $335,000.
"It appears that (sales and prices) are still on the rise on this side of the island," said Bertsch, who found that buyer interest on the $635,000 Makaha duplex was up last month.
Paul Brewbaker, Bank of Hawaii chief economist, has previously said that he expects significant price increases to end for higher-priced neighborhoods such as East Honolulu and Windward O'ahu, and strong appreciation in more moderate areas like Makaha.
Brewbaker predicted that O'ahu home prices in general could rise 10 percent to 20 percent next year.
For all of O'ahu, there have been 7,445 condo sales this year through November, up 3.6 percent from the same period last year.
Single-family home sales are up 0.4 percent to 4,302.
Year-to-date dollar volume for total sales on O'ahu is $5.57 billion, up 29 percent from $4.31 billion.
Reach Andrew Gomes at email@example.com.