Will sky-high Hawai'i housing prices finally come down?
|||The burning questions of 2006|
By Andrew Gomes
Advertiser Staff Writer
By Andrew Gomes
Many holiday party conversations this season turned to the high cost of housing and sky-high property taxes, and it's no wonder.
Home prices on O'ahu nearly doubled over the past four years, pushing November median prices to around $640,000 for single-family homes and $305,000 for condominiums. Neighbor Island homes saw double-digit increases as well, and the trend is expected to continue in the new year.
Local real-estate experts say that as home prices continue their ascent in 2006, rents in turn will be pushed higher, squeezing many who are struggling. And with interest rates projected to rise from about 6 percent to almost 7 percent, homes could be even less affordable for Hawai'i middle- and low-income wage earners than over the last decade.
State and county officials are trying to create more affordable housing, with one effort aimed at developing rental units financed through a state fund infused with more money from property conveyance taxes. But government initiatives this year aren't expected to ease much of the demand for affordable rentals, projected at 17,000 units by 2009.
Paul Brewbaker, chief economist for the Bank of Hawaii, predicts that home prices will rise by 10 percent to 20 percent in 2006 after about a 30 percent increase last year, the strongest appreciation rate since 1990 at the peak of the Japanese investment bubble.
It took about 50 percent of the O'ahu median family income to buy a median-priced single-family home last year, said Harvey Shapiro, research economist for the Honolulu Board of Realtors. Compare that to a low of about 30 percent in 2001, and a peak of about 60 percent in 1990, based on data the board began tracking in 1985.
For those who still can afford to buy a home, a tilt toward a buyer's market could emerge this year, with more inventory, prices rising less rapidly and sellers more willing to negotiate, according to Gary McCarty, a broker with Coldwell Banker Pacific Properties.
"These factors are putting buyers back in control of the market," he said.
Reach Andrew Gomes at email@example.com.