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The Honolulu Advertiser
Posted on: Wednesday, April 5, 2006

O'ahu home-sales slowdown ends

By Andrew Gomes
Advertiser Staff Writer

The slowdown in O'ahu's resale housing market paused last month after the number of homes sold increased for the first time in six months, and the median price for single-family homes jumped to a record $650,000.

The price rise was steep but not unexpected by some local economists who predict prices will continue rising this year and possibly next year, too.

However, the small spike in transactions up 4 percent for single-family homes was a surprise.

"I don't know what to make of it," said Harvey Shapiro, research economist for the Honolulu Board of Realtors, which released the sales data. "I think it's just a burp."

Shapiro and economists from the University of Hawai'i and Bank of Hawaii still forecast fewer sales of previously owned O'ahu homes this year, in part because of modestly rising prices and interest rates that are making homes less affordable for more buyers.

The consensus is that the median price for homes will rise modestly this year between 5 percent and 20 percent, compared with almost 30 percent last year.

For single-family homes sold last month, the median price was up $100,000, or 18 percent, from $550,000 a year earlier, and was up from $613,500 in February. The previous high was in November when the median was $640,500.

"That's just the continuing trend," Shapiro said. "We believe the price will continue to be up even in the face of fewer sales."

Condominiums last month sold for a median of $312,000, down from the record $315,000 in February but up from $230,000 in March 2005.

A report issued yesterday by the University of Hawai'i Economic Research Organization forecasts that median single-family home prices on O'ahu will rise 8.1 percent this year, followed by a 5.1 percent increase next year.

For many buyers, especially those trying to become first-time homeowners, the rising median sales price a point at which half the sales are for more and half for less has made it difficult.

"(Prices) in certain areas have just been ridiculous," said Dana Hileman, a new homeowner who said she and her husband, Paul, were fortunate to have a friend sell them a house in Makaha last month for a good price the low $300,000s.

The fixer-upper with eight bedrooms and four bathrooms accommodates the Hileman 'ohana which includes five children, one grandchild and some hanai family and came with a monthly mortgage that was less than the rent they were paying for a home in Mililani.

"You have to weigh your options," Dana Hileman said, adding that she has friends moving farther west on O'ahu because prices in Central O'ahu and other parts of the Island have become so high.

Most of the recent sales activity has occurred in Leeward O'ahu where prices are rising but remain more affordable, according to the Honolulu Board of Realtors. The data showed single-family home sales in the first three months of the year were up 11 percent for Leeward O'ahu but down 3 percent islandwide.

For all of O'ahu, there were 392 single-family homes sold last month, up 4 percent from 377 a year earlier. Condo sales rose 3 percent to 696 last month, compared with 677 a year earlier.

The March increase in sales ended a run since October where the number of sales was lower than the same month a year earlier for single-family homes and condos.

Still, Shapiro said he expects fewer sales this year than there were last year. "The market is continuing to stabilize," he said. "We've been in a strong seller's market, and that is now shifting to a buyer's market."

As part of the emerging buyer's market, inventory has risen significantly in the last several months to a level about twice as high as a year earlier. There were 1,642 single-family homes and 2,248 condos available for sale last month, compared with 847 and 1,029, respectively, a year earlier.

It's also taking longer to sell homes. Single-family homes sold last month spent a median 44 days on the market, up from 26 days a year earlier and the highest since March 2002. Condos spent a median 30 days on the market, which was one day shorter than in February and three days longer than a year earlier.

Shapiro said that based on pending home purchases, the number of sales likely to close in April appear a bit weaker than a year earlier, though prices should be higher.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.

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