Overall, the Honolulu Market continues to go from strength to strength, with price increases unbothered by increasing inventory. Often, when inventory rises, prices take a hit as buyers with more choice have increased bargaining room. Not in Hawaii. The only hint of more inventory has been an increase in days on market
For single-family homes, the median time to sell was 29 days compared with 15 days a year ago – nearly double the time. However, for condos, days on market only increased from 21 days last year to 25 days in October 2018. The inventory bump has been welcomed by Darryl Macha, president of Honolulu Board of Realtors.
“The inventory of homes and condominiums available for sale has been rising, providing more options for potential homebuyers and leading to an increase in the days on market,” Macha said. “Oahu’s housing market continues to be a stable environment for both buyers and sellers.”
Single-family home prices are up 4 percent from 2017 with median home prices averaging $787,000 in the first 10 months of 2018, compared with an average median of $755,200 last year. Volumes are also continuing to grow as more inventory frees up and new construction hits the market. In fact, volumes have continued to rise steadily since 2009 when 2,585 homes were sold, compared with full-year 2017 sales of 3,914 properties. Hawaii was a little in front of the Great Recession with volumes beginning to drop quickly from 2005 to 2009. On the median price front, trends were more in line with the mainland, with sale prices peaking in 2007, dropping until 2009, then wobbling until 2012 when they began to rise again. Price-wise, Hawaii shook off the Recession in 2012 with prices surpassing pre-bubble levels.
Condo sale prices were similarly up 4.2 percent between 2017 and the first 10 months of 2018 from $405,000 to $421,500. Condos are a little more difficult to gauge than single-family homes. Whereas single-family home building produces properties in a variety of price bands, new condo construction is concentrated in the luxury segment. A new building coming online can skew numbers wildly month-to-month (as you will see below). Also, similar to the single-family market, volumes have continued to grow steadily since 2009 when 3,467 condos changed hands, compared with 5,820 in 2017 – this year looks like volumes will continue to rise due to more choice in the market.
When looking at single-family sales on a month-by-month basis since January 2016, a finer-grained picture emerges. First, remember Hawaii reports median price, where half are sold above and half below, not average prices. Some months certainly look like bargain months, but remember, Honolulu is a relatively small market with well under 500 homes changing hands in a given month. A few mega-mansions can tip the price one way or another.
One factor on sales volumes has been rising interest rates. While Honolulu has a lot of foreign cash buyers, much of the market needs bank financing. At the heights of Hawaii prices, even small interest rate increases can crimp the risk and resulting budget of second homebuyers as well as locals. Certainly, it’s been driving a slight volume slowdown that tipped in January and again in August for single family homes.
For those looking to time the market, the autumn tends to be the slower season before California snowbirds and winter vacationers seek a place on the beach.
The condo market is more susceptible to fluctuation being the main target of second home buyers from the mainland and abroad. Political turmoil at home, interest rates, or general economic conditions in the US all play a heavier role in condos than single-family homes.
This also means its prices and volumes are further impacted by new buildings releasing units for occupancy. In these situations there can be 50 or 100 units closing in a couple of months – all most likely luxury units skewing the median price. It’s why when you see months above with a price spike bracketed by much lower media prices. You can also see the effect where about once a year there’s a month where prices appear to drop substantially – May 2016, June 2017, October 2017, and October 2018. But also remember, the price scale on the right is fairly tight. The September-October 2018 fall was from $428,000 to $390,000 – 10 percent. Prices for your dream condo didn’t suddenly fall, but the mix that month tended to be lower.
Overall, the increase in inventory has helped buyers by giving them more choice and the chance to catch their breath before jumping in with an offer. While there are still bidding wars for choice properties in the right price bands, they are decreasing from the highs in the recent past. I won’t parrot Realtor-speak and say it’s a “great time to buy,” but if you’re going to, there have been much worse times to buy. In Hawaii, that’s usually “tomorrow.”
Remember: When I’m not stirring up trouble in Dallas, Texas or Honolulu, Hawaii for Candysdirt.com and SecondShelters.com, I’m off scouting interesting locations for a second home. In 2016, 2017 and 2018, the National Association of Real Estate Editors recognized my writing with three Bronze (2016, 2017, 2018) and two Silver (2016, 2017) awards. If you’re a Realtor with second home clients who’d like me to feature their journey, shoot me an email firstname.lastname@example.org. Be sure to look for me on Facebook and Twitter. You won’t find me, but you’re welcome to look.