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The Honolulu Advertiser
Posted on: Friday, March 3, 2006

O'ahu home sales leveling off

By Andrew Gomes
Advertiser Staff Writer

O'ahu's housing market mellowed further last month as fewer people bought homes at prices that reached a record high for condominiums but were little changed for single-family homes.

It was the fifth consecutive month fewer single-family homes and condos sold compared with the same month a year earlier.

Median prices were $613,500 for single-family homes, down slightly from the previous month but still up significantly from a year earlier, and a record $315,000 for condos.

The Honolulu Board of Realtors, which released the sales data, said the number of transactions declined 7 percent. There were 248 single-family homes sold last month compared with 266 a year earlier, and 487 condo sales compared with 525 in the same period.

The broad softening of the market is particularly being influenced by a flood of properties put on the market by sellers, some of whom perceive the price peak is near and want to get top dollar.

"There are a lot of people cashing in right now," said Tony Kawaguchi, an agent with Re/Max 808 Realty in Honolulu. "A lot of people don't expect to make a lot more money. The feeling is it's better to sell too early than too late."

The mix of more sellers and fewer buyers has driven up home inventory dramatically over the past several months to levels not seen in five or more years.

Last month, there were 1,619 single-family homes on the market, almost double what it was a year earlier and the highest since early 2001. Condo inventory last month was at 2,209, or about 1,000 more than a year earlier and the highest since late 1999.

With so many homes for sale, it's taking longer for most sellers to find buyers. The median number of days single-family homes spent on the market rose to 42 last month, meaning half sold faster and half slower.

The last time single-family homes sat on the market so long was back in March 2002, when median days on the market was 53. February's median sales pace of 31 days for condos was two days shorter than a year earlier.

"The trend is like the inventory clearly up," said Harvey Shapiro, research economist for the Honolulu Board of Realtors. "Overall, the O'ahu market is stabilizing."

High inventory is one of the factors contributing to flattening prices for single-family homes. With more selection for buyers, sellers are having to be more competitive on price.

February's $613,500 median price for single-family homes compared with $615,000 in January and $610,000 in December. The February median was still 17 percent higher than $525,500 in February 2005.

For condos, February's $315,000 median sale price was a record, topping the previous high of $305,000 in November and December. In February 2005, the median was $235,000.

Honolulu resident Gregg Abrigo said he is amazed by the market that in just a few years has given him incredible appreciation for one condo but also cost him an astounding sum for another.

Abrigo, who works two jobs and has a wife who stays home with their two young daughters, paid $138,000 in 2002 for a one-bedroom unit at Queen Emma Gardens. But the arrival of his second daughter necessitated a November move to a two-bedroom unit in the same building that cost $450,000.

"That's not really a deal," Abrigo said, recalling that not too long ago two-bedroom units were selling for under $200,000. "But this is reality."

Abrigo said he feels fortunate because he didn't have to sell the one-bedroom unit, which could fetch $325,000 or more given comparable unit prices. Instead, he rents out the unit. "That's going to be my retirement income," he said.

Even if home prices go down, Abrigo feels he made good investments because he will be building equity paying a mortgage as opposed to renting.

Shapiro predicts that while prices may level off from month to month this year, they still should rise around 10 percent above last year. Other real estate industry leaders and Bank of Hawaii chief economist Paul Brewbaker forecast prices will be up this year anywhere from 5 percent to 20 percent, after growing about 30 percent last year.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.

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