Housing price dip may be just a blip
By Andrew Gomes
Advertiser Staff Writer
A drop in the median home price on O'ahu and Maui from the previous month may seem like an encouraging sign to homebuyers, but real estate analysts cautioned not to read too much into the one-month dip.
On O'ahu, the state's largest housing market, the median price for a single-family home was $593,300 in June, down slightly from the $610,000 record set in May, but up from $481,800 a year earlier, according to the Hono-lulu Board of Realtors.
On Maui, June's median single-family home sale price dipped to $735,000, compared with May's record $780,000 and $516,000 in June 2004, according to the Realtors Association of Maui. The median is the point where half the sales are for more and half for less.
The median condo price on O'ahu fell slightly in June from May while Maui condo prices rose. Both were up when compared with prices a year ago.
Experts say the month-to-month price changes are not a reliable indicator because of seasonal differences and fluctuations in the mix of luxury and entry-level homes. The more meaningful number, they say, is the year-on-year change which continues to show large increases.
Bill Chee, president of Prudential Locations, said O'ahu's May-to-June price drop could have been from the mix of high-end and low-end homes sold, with maybe more lower-end homes closing in June compared with May.
"My guess is that (the change) is in the mix," he said. "It's probably not statistically significant."
Harvey Shapiro, research economist for the Honolulu Board of Realtors, agreed, saying the month-to-month change in the O'ahu median could have been from more West O'ahu homes than East O'ahu homes sold last month. He also suggested that prices are likely to continue their advance.
Shapiro and Chee point to the year-over-year changes as the better indicator of home pricing trends.
Single-family home and condo sale prices on O'ahu in June were up 26 percent and 23 percent, respectively, over a year earlier. That's consistent with the roughly 25 percent increase during the first six months of this year compared with the same period last year.
On Maui, single-family home and condo sales in June were up 42 percent and 37 percent, respectively, over a year earlier significantly above the roughly 27 percent increase during the first half of this year over the same year-ago period.
Riding price tide
David Patterson, a Hawai'i Kai resident and father of three, is among many Hawai'i homeowners who have ridden the rising tide of real estate prices over the last year.
Patterson had bought a $545,000 single-family house in Kalama Valley after a Hawai'i Kai rental condo, which his family called home for nine years, was put up for sale by its California owner.
"When we bought our first home, some people said we were crazy. At the time I thought, this is ridiculous. It was something we had to do," he said.
A year later, after learning his wife is pregnant with their fourth child, Patterson took the opportunity to upgrade from their roughly 30-year-old house, selling it for $705,000 and buying a year-old Peninsula townhome of nearly equivalent size for the same price about a month ago.
"It has been a nice upgrade for us," he said.
Increase may slow
Chee of Prudential Locations said he expects home prices to continue going up, though at less than the roughly 25 percent annualized increase so far this year for O'ahu.
"It's difficult for a market to continue an annualized 25 percent gain," he said. "We expect to see a slowing of the appreciation rate. (Prices are) going to go up, but at a slower pace."
Still, he said the sustained roughly 25 percent increase in O'ahu home prices this year over last year is surprising.
"There is no indication that there is price weakening, which is kind of scary," he said.
Shapiro said nearly one-third of all condos and single-family homes sold last month traded for more than their asking price.
"These are both new O'ahu records, and seem to imply that future prices will continue increasing," he said.
On O'ahu, the median condominium price eased in June to $264,000 after a record $265,000 in May, but was still higher than $210,000 in June 2004.
On Maui, condos sold for a median of $405,000 last month. That was up from $352,500 in May, and compared to the $430,000 record set in January. In June 2004, the Maui condo median price was $295,000.
The median price is considered a more accurate measure than averages, which are often influenced more by fewer sales at an extreme low or high price.
Judith Kalbrener, president of the Honolulu real estate broker trade association, said low inventory continued for the market, with fewer people putting their homes up for sale in June compared with a year ago, making available roughly 600 single-family homes and 900 condos.
Total inventory on O'ahu, which includes homes added to the market in previous months, stood at 879 single-family homes and 988 condos. Those figures were up a little from May, but below the 1,036 single-family homes and 1,450 condos in June 2004.
"They are extremely low levels," Shapiro said of last month's inventory.
O'ahu sales rise
Despite low inventory, the number of sales increased. There were 440 June single-family home sales, up 1 percent from 434 a year earlier. Condo sales last month totaled 703, up 3 percent from 682 a year earlier.
For the first half of the year, the number of O'ahu single-family home sales was up 1 percent to 2,200 at a median price of $551,100 that was 26 percent higher than the same period last year.
The number of O'ahu condo sales from January to June was up 6 percent to 3,921 at a median price of $245,000 that was 24 percent higher than the year-ago period.
Total dollar volume of O'ahu sales for the first half of the year was $2.7 billion, up 29 percent, or about $600 million, compared with $2.1 billion in the first half of last year.
Maui sales also up
The sales data represents transactions completed in June, reflecting sales prices typically agreed upon between February and April.
On Maui, there were 139 Maui single-family home sales, up 26 percent from 110 a year earlier. Condo sales totaled 171, up 3 percent from 166 a year earlier.
For the first half of the year, the number of Maui single-family home sales was up 12 percent to 666 at a median price of $670,000 that was 26 percent higher than the same period last year.
The number of Maui condo sales from January to June was down 11 percent to 981 at a median price of $371,500 that was 28 percent higher than the year-ago period.
Total dollar volume of Maui sales for the first half of the year was about $1.2 billion, up 26 percent, or about $244 million, compared with $924 million in the first half of last year.
Kaua'i and Big Island home sales statistics are typically released later in the month.
Reach Andrew Gomes at email@example.com or 525-8065.