Posted on: Wednesday, January 5, 2005

Median price for home hits $495,000

By Sean Hao
Advertiser Staff Writer

It's now $495,000 and rising.

The median price for an existing single-family home in O'ahu hit a record $495,000 in December and could climb to $529,000 by the end of the year.

First-time home buyers looking for a low price will be in for a struggle this year.

"If they're hoping for prices to decline, they've probably missed the boat," said Harvey Shapiro, research economist for the Hono-lulu Board of Realtors.

Hawai'i's hot housing market — which is tied to a strong economy and growing tourism trade — should continue to sizzle in 2005, Shapiro said. Last year the median price — the point at which half of sales are more expensive and half less expensive — rose by 21 percent, and this year it could add another 10 to 15 percent, he said.

"It was really a very expansive growth year in the housing market," Shapiro said. "I don't think we'll see the same sales growth, but home prices, I think they'll still grow."

Last year was a record year for real estate on O'ahu with existing housing prices, total sales volume and unit sales all hitting highs, according to a report released yesterday by the Honolulu Board of Realtors.

In December, 417 single-family homes sold and 701 condominiums. The median price for condos was $217,000 last month, down slightly from November.

"We had a resounding finish to this record year in the O'ahu housing market, with strong numbers for both property types," said Judith Kalbrener, president of the board in a written statement.

Overall, total dollar sales volume rose 34.7 percent last year to $4.76 billion, topping 2003's record $3.54 billion.

While the year-to-year rises in median home and condo prices were staggering, they don't exceed growth witnessed in 1990 when median single-family home prices rose 30 percent to $352,000 and condo prices rose 38 percent to $187,000.

"That really confirms that we're not in a housing bubble, we're just in a growth period," Shapiro said. "In the '90s we certainly were in a bubble. Home prices went too high."

During the late 1980s and early 1990s housing prices rose sharply only to fall back as the Japanese economy faltered. That among other factors led to nearly a decade of relatively stagnant economic growth.

In 2004 a record 12,950 homes and condos changed hands, which was up from the 2003 record of 11,326 existing homes and condos sold.

Leroy Laney, Hawai'i Pacific University economics and finance professor, agreed with Shapiro's outlook for this year in predicting a rise in home prices as high a 15 percent —which would be a slower rate of appreciation than last year.

"I don't think we'd want to see an accelerating pace," he said. "That would cause problems. But I don't anticipate that happening.

"I think there are enough people around who remember what that did to us in the '90s," Laney added.