Many have wondered when and if Oahu's housing market would be hit the way mainland markets have been crushed. In the fourth quarter of 2008 Hawaii had a significant decline and some neighborhoods lost value.
In January we saw many new prospective buyers enter the market, lured by weak sales and low interest rates. Some have made offers on properties and others are watching to see what happens with an eye on 30-year mortgage rates.
Meanwhile, sales in January tanked. These closings probably represent offers made in November and December 2008, when financial news seemed to be bad nearly every day. While we hope for the better, long-timers still remember the mid 1990's and worry about a repeat.
Here's how Oahu's home sales and median prices in January 2009 compared with the same period last year.
|Oahu home sales January 2008 vs. 2009|
|Homes Sold||Prices Up|
|Neighborhood||2008||2009||Median Sale Prices||or Down|
|Honolulu||11||2||$ 1,100,000||$ 515,500||($584,500)|
|Waialae-Kahala||7||7||$ 1,351,000||$ 1,392,000||$41,000|
|Kapahulu-Diamond Head||18||4||$ 909,000||$ 542,500||($366,500)|
|Hawaii Kai||12||8||$ 834,000||$ 755,000||($79,000)|
|Aina Haina-Kuliouou||4||4||$ 890,000||$ 933,800||$43,800|
|Kailua-Waimanalo||12||8||$ 980,000||$ 705,000||($275,000)|
|Kaneohe||13||10||$ 733,000||$ 770,000||$37,000|
|Windward Coast||6||2||$ 594,500||$ 325,000||($269,500)|
|Moanalua-Kalihi||8||6||$ 617,500||$ 530,000||($87,500)|
|North Shore||4||7||$ 1,162,500||$ 560,000||($602,500)|
|Wahiawa||6||2||$ 417,500||$ 498,800||$81,300|
|Mililani||23||12||$ 550,000||$ 605,000||$55,000|
|Makaha-Nanakuli||22||13||$ 428,000||$ 400,000||($28,000)|
|Ewa-Kapolei||43||19||$ 465,000||$ 482,000||$17,000|
|Makakilo||7||3||$ 600,000||$ 370,000||($230,000)|
|Waipahu||19||11||$ 535,000||$ 510,000||($25,000)|
|Pearl City-Aiea||13||4||$ 629,000||$ 507,000||($122,000)|
Median Prices on Oahu
First, let's define median prices. A median separates the higher half from the lower half. Half of the sales were higher and half of the sales were lower than the median price. Median is not the same as an average. Using average prices, if we had one sale for $10 million and 15 sales at $500,000, the average would be $1,093,750. The median price would be $500,000. Thus, median prices are considered to better reflect what most home buyers and sellers will see.
Median price changes in some neighborhoods were drastic. Understanding the cause is important in knowing what to expect when you're looking to buy and sell Hawaii real estate.
For example, Honolulu median prices decreased from $1.1 million to $515,000 in January. For January 2008 there were were 11 home sales and in 2009 there were two. This does not mean Honolulu homes are on sale for half price. It means the more expensive properties in Honolulu did not sell in January. It also shows that these homebuyers probably bought the lowest priced properties in this area, which were likely older homes due for some upgrades.
How bad will Hawaii's housing market get?
We see this as very bad for most homeowners already. January's home sales were the weakest since February 1998 - eleven years ago! Some neighborhoods, such as Kapolei, Makakilo and Ewa Beach are where prices have declined substantially. The more popular neighborhoods in Honolulu and Windward Oahu are holding up reasonably well. Owner-occupants who bought many years ago are likely to hang onto their properties. They still need a place to live and even if prices decline further, many will have signficant equity in their homes. This factor will probably limit the available inventory for sale and keep prices from going into a tailspin. Take a look at home sales in Waialae-Kahala and Aina Haina-Kuliouou, for instance.
On the other hand, investors who bought in the last couple of years may be getting out soon to cut their losses. Investors do buy high end properties in the expensive neighborhoods. However, most investors probably buy the more affordable homes and condos and in those neighborhoods prices are down.
For Hawaii property owners looking to sell now, please contact Mike Bates at (808) 551-2663.
Buyers looking for deals - let us know what you're looking for and we'll setup price alerts. When properties meeting your criteria become available, we'll e-mail the listings to you. Please use our contact form or call Mike Bates at (808) 551-2663.
Aloha, Mike Bates
One more thing, this information might seem to conflict with my earlier blog post about Moana Vista sales picking up. The chart above represents sales of existing single family homes. Sales at some new developments such as Moana Vista are not included in the sales figures because the sales are not entered into Oahu's MLS system.