Four years after the most recent market peak, Oahu and East Oahu residential real estate markets continue their paces in a healthy market cycle.
Oahu has seen increased overall sales since January 2009 followed by a decreasing inventory since February. This follows the normal pattern of supply and demand: as the inventory pool gets smaller, prices will eventually rise due to competition.
For May, Oahu single-family listings were listed for 9% less than what the existing inventory is listed for, or roughly $66,000. The price difference between the new-listing median price and the median price for what single-family homes are actually sold for is 16.5%, or $109,000 less.
A drastic difference can be seen when reviewing data for just East Oahu. Year-to-date, the median sold price for single-family homes is $800,000 and for condominiums it is $450,000, the highest median prices for all of Oahu.
For each area in East Oahu, Kapahulu-Diamond Head through Hawaii Kai, the median price for all inventory reached over $1.1 million. However, the spectrum widened for May’s new listings with a low of $879,000 in Kapahulu-Diamond Head and a high of $1,695,000 in Aina Haina-Kuliouou.
Year-to-date, there are 364 single-family listings and 193 condominium listings in East Oahu. Of these, 93 single-family residences and 44 condominium properties were listed in May. Of the total inventory, 11.5% sold or were closed in May. Data taken only accounts for properties that were closed and recorded; it does not take into consideration pending sales.
Historically, East Oahu fares better than the rest of Oahu, holding value over time and through market cycles. East Oahu is not immune to market fluctuations, it just has the value and ability to bounce back quicker and stay ahead of the rest of Oahu due to its high desirability, or its “location, location, location.”
There is much inventory to choose from and though interest rates did see a slight increase in May, rates are still historically low and can provide more buying power to purchasers. The three C’s are still at the forefront of lending: credit, capacity and collateral. Lenders are still very cautious and scrutinizing more when considering loan approvals.
If this trend continues, we will see a continued decrease in inventory and increasing prices. Though the law of supply and demand says this will occur, there may be a period where both inventory and prices are decreasing at the same time or possibly, a slight increase in inventory while prices are decreasing. In time, both should become elastic and move in opposite directions in the favor of an upward market.
All data is courtesy of the Honolulu Board of Realtors®, Monthly Statistical Report, May 2009.