Market News

Even though home prices and mortgage interest rates have not dropped, buyers and sellers are still coming together to buy and sell homes. The largest concentration of home sales on O’ahu are between $800,000 and $1 million for homes and $300,00 to $600,000 for condos. The competition for homes and condos in those price ranges is so strong that buyers are paying higher than or at asking. Price ranges where buyers are getting the largest discount are below $450,000 for homes and below $150,000 for condos. The $1,000,000 to $1,499,000 has also been one where buyers have negotiated a lower price, with homes closing in July at 98.5% of the asking price and 96.8% for condos.

Where is the Summer Sizzle? In past years, the market fires up in June, July and August, caused by people moving in and out of Hawai’i and those who want to upsize into a different home. The first month of the summer results are in and they are less than inspiring but with hidden potential.

The O’ahu Real Estate Market continues to strengthen and recover from a low point in October of 2022. While the median home sales price of $1,109,000 is lower than the same month last year by 3.9%, home prices are up by 10.9% compared to last month. Similarly, the condo median price is slightly lower than the same month last year (.3% down) and up 3.3% compared to last month. Demand is also starting to rise as we move into the summer months as closed sales for homes (up 26%) and condos (up 4.3%) drifted upward compared to the previous month.

As the real estate market on O’ahu continues to soften, the needle continues to move towards the center, allowing more choices for buyers, more time to make those choices and an improvement in housing affordability.

The market continues to move towards a balanced market where neither buyers nor sellers have significant negotiating leverage over the other. That means demand has slowed, allowing buyers to take more time to select the right property to purchase and consider their options. Fewer homes sold (down 26.5% for homes and 33.3% for condos) and a decline in homes/condos for sale (28.9% and 25.8%) translates into more inventory for buyers to choose from allowing them. Buyers who purchased last month paid 96.7% (homes) and 98.5% (condos), a far cry from the 102% and 100% of the list price they had to pay a year ago to buy a property.

According to the Honolulu Board of REALTORS® Monthly Statistical Report for data through February 2023, demand continues to slow, prices are coming down, the number of properties for sale have increased and it takes twice as long to sell a home. Buyers interpret this to mean they are competing with less buyers, they have more choice, homes are more affordable, buyers have more time to make a decision and now sellers are willing to negotiate their price down. Does that mean it is a buyer’s market? Not so fast. There are still less than 700 homes for sale on an island of more than 1 million people and the median sales price of $987,000 for homes and $480,000 for condos is still 9.5% higher and 6.6% higher than 2 years ago. Furthermore, the remaining inventory of homes is just 2 months. That means if nothing new comes on the market for sale, at the current rate of sales, everything would be sold in 60 days. While the market has softened significantly and it is moving towards a buyer’s market, we aren’t there just yet. It is more of a neutral market.

After months of demand declines, prices finally began to soften. The average sales price and the median sales price for homes took a 10.8% dive, landing at $1,139,294 and the median price for homes dropped below a million dollars ($970,000). The condo/townhome median price dropped to $495,000, which was a 2.9% decline. The average price of a condo increased slightly to $633,441 a 1.5% gain.

A massive shift in leverage has occurred over the last six months and that leverage applied downward pressure on sellers’ list prices. According to the Honolulu Board of REALTORS® Monthly Statistical Report, last month home sellers sold for 96.7% of their list price, while condo sellers sold for 98.5% of the sellers’ list price. That’s a far cry from the 102% buyers had to pay just 6 months (100% for condos) ago. The shift was a result of more choices for buyers to choose from, less competition between buyers for properties and time to make their decisions. In fact, days on market for homes that sold last month jumped by 127% for homes and 63% for condos. It took 25 days for home sellers and 21 days for condo sellers to accept an offer for the homes that sold last month. Additionally, the number of homes for sale rose by 93% for homes and 23% for condos.

Buyers begin to rejoice as they now have more time, more choices and more leverage to negotiate. According to the Honolulu Board of REALTORS® Monthly Statistical Report, the median days on the market for home and condo sales for October jumped to 19 days. Last October, homes sold in 10 days and condos sold in 11 days. This shift allows buyers to have more time before deciding which property they want to offer. The added time also allows buyers to see more options, which is important now that the inventory of homes for sale has jumped by 63.6% (14.9% for condos). Last month, buyers were able to negotiate an average reduction in list price by .2% as the Sales Price To List Price for homes sold in October was 99.8% (99% for condos). While that may sound small, consider the fact that until recently buyers had to pay over asking and experience bidding wars to buy a property.

As expected, rising interest rates have softened the demand for housing, illustrated by a decrease in sales for both homes (-34%) and condos/townhomes(-19%). However, sales prices continue to move up by close to 5% (4.8% – homes, 5.1% – condos) and it still took less than 3 weeks for sold properties to accept an offer on their home.

Last month the number of single family homes for sale was 43% higher than July of 2021. Buyers took longer to pull the trigger on properties, as illustrated by the increase in Median Days on Market from 9 days to 13 days. Yet, when buyers did make their offer, on average, buyers paid 100% of the asking price of a home. What does this all mean? Buyers have more properties that meet their criteria and it takes a bit extra time to see all of them. Also, they are still aggressive with their offers to fend off competition, resulting in the average and median sales prices for homes rising once again last month (7.2% and 1.9%).

The market has shifted and continues to change. Prices are up, sales are down and there are more homes for sale. When the market shifts, buyers and sellers also shift. Buyers ask, “Should I buy now?” Sellers ask, “Can I still get my price?”

Affordability and Availability loom large in today’s real estate market. According to the Honolulu Board of Realtors’ Monthly Stats Report, prices continue to rise for both condominiums and homes as compared to the same time last year. The median sales price for homes during the month of June was $1,100,000 up from $979,000 in June of last year (2021). The condominium median price last month also continue to rise moving up to a record high of $534,000. The continued high prices have affected buyers and their ability to afford these prices. Last year, we believe the high price of single family homes pushed buyers into townhomes and condominium units which were more affordable. Now, we are seeing a drop in the number of closed sales and pending sales as compared to last year. Less sales may not mean lower prices, however, it has led to more inventory for sale on the market. At the end of June there were 39.8% more homes for sale that buyers could choose from. In summary, buyers now have more choices, sellers are still selling for top dollar and the increase in mortgage interest rates have cut into the buyer’s purchasing power.

For almost a decade, sellers have had leverage in negotiating prices and terms because of high demand and low inventory. The tide may finally be changing. According to the Honolulu Board of Realtors Monthly Stats Report for sales through May 31, 2022, the inventory of single family homes on O’ahu rose by 39.8% as compared to the same period last year. If this trend continues, buyers may soon have more choices and compete with fewer offers when they find the property that is right for them. Keep in mind that inventory has been at such low levels that a large leap like 39% doesn’t mean there is a home for every buyer. In some neighborhoods around the island, we still see multiple offers and prices are still rising, evidenced by last month’s median sales price of $1,153,500, which is a record high for O’ahu.

According to the Honolulu Board of REALTORS® Monthly Statistical Report (Results through April 2022), active inventory of single family homes for sale increased by 3.7% compared to the same time last year and 9.7% as compared to the prior month (March 2022). Buyers have been waiting for years for more homes to choose from and a neutral market after a half-decade of hyper-competition and limited choice. That said, while inventory is increasing for single family homes, the opposite is occurring in the condominium and townhome segment, which experienced a 19% drop as compared to the same month last year.

Aloha, The inventory crunch continues for yet another month as new homes for sale dropped during the month of March by 6.2% for single-family homes and .1% for condominiums/townhomes.

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