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The Honolulu Advertiser
Posted on: Thursday, July 6, 2006

Buyer's market taking shape

By Greg Wiles
Advertiser Staff Writer

O'ahu home buyers are paying more for houses compared to a year earlier, though there are signs that the market is turning into more of a buyer's market.

The median price of a single-family home was $639,000 last month, or 7.7 percent higher than a year earlier, according to figures released late yesterday by the Honolulu Board of Realtors.

Still, price gains are slowing from last year, when the median selling price surged 28 percent. The number of houses sold in June declined, and those with for-sale signs spent longer on the market. The deceleration is occurring as interest rates inch up and housing prices rocket out of the orbit of some buyers' budgets.

In June, an average home was on the market for 50 days in June compared with 15 days a year earlier. The number of homes on the market totaled 1,836, or more than double June 2005's number.

"It's not so much of a seller's market anymore," said Harvey Shapiro, the board's research economist. He said it's now uncommon for buyers to offer over asking price for a property, something that occurred frequently last year.

"We peaked in the third quarter of last year, and we're coming down to more sustainable levels. The last few years have been a frenzy."

He said the market is moving toward an equilibrium point between buyers and sellers. Inventory levels are back to 1999 numbers.

"The housing market continues on a more stable path," board president Mary K. Flood said in a statement. "As the market continues to normalize, home buyers and sellers are both going to benefit."

That includes buyers having more time to comparison-shop and sellers seeing higher prices for properties, she said. Part of the increase in prices is being fueled by the state's low unemployment and rising wages.

The number of home-sale transactions fell to 368 in June, about one-sixth less than a year ago.

The figures also show similar trends are occurring with condominium sales, with prices rising as volume declines. In June, the median condominium price was $310,000, a $46,000 jump from 12 months prior.

Condominium sales volume fell to 641 from 703 in June 2005, as the average number of days on market went to 39 from 16 a year earlier.

The June median home sales price slipped from the record of $668,300 set in May. Shapiro said May's price was skewed by more home sales in East O'ahu, where prices are higher than other parts of Honolulu.

He said June's sales were more balanced among all parts of the island. He and other analysts have projected median home prices may hit $700,000 this year or next.

Shapiro said he continues to believe that price may be achieved this year. While he hasn't made a specific forecast for condominium prices, he said they generally move with home sales and average about half the price.

Reach Greg Wiles at gwiles@honoluluadvertiser.com.

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