High-end properties defy cooling trends - Million-dollar market remains relatively stable.

 

HONOLULU ADVERTISER   November 19, 2006

BY LISA SCONTRAS

Custom Publishing Group

 

Despite predictions of declining values in the high-end markets, home sales in the million-dollar-plus category on Oahu are holding up better than expected.

Typically, luxury home sales are the lead indicator of a market slowdown. But in neighborhoods like Hawaii Loa Ridge, Kahala and parts of Hawaii Kai, sellers are continuing to open escrows at an astounding rate, according to Dolores Bediones, Realtor and partner at Prudential Locations LLC.

“The million-dollar-plus market has been doing surprisingly well,” says Bediones, who specializes in high-end sales. “What is happening is sellers who were originally pricing their homes too high, are now listening to the market and adjusting their asking prices.

Practically all of the homes that are currently in escrow got there after one or two price adjustments. Once they hit the right number, the offers started coming in.”

 

Statistics support the unexpected show of strength in this segment. While sales activity in the overall market are off from a year ago by 17.7 percent in single-family homes and 31.8 percent for condominiums, the number of sales in the million-dollar market has remained strong, according to data gathered by the Honolulu Board of Realtors and Prudential Locations.

In fact, according to Prudential’s sales data which breaks down the million-dollar-plus sales into six categories, the number of sales are up from a year ago in the $2- to $3-million-dollar category as well as the $4- to to $5-million dollar category and the $5- to $10-million-dollar category. If this trend holds true, the data may be another indicator pointing to relative strength in the local market overall.

 

“It shows that there are buyers around and they know value when they see it,” says Bediones.

“These buyers are very well informed, they have been watching the market and know when it’s time to make the move.”

 

Bediones, who just sold a million-dollar fixer upper in Diamond Head, says sellers are still making a reasonable return on their investment even while willing to get more realistic with their listing prices.

 

“My listing — with single-wall construction, and the original kitchen and bath — was originally listed for $1,588,000 ... was reduced to $1,488,000 and then reduced again to $1,348,000. We received three offers after the second price adjustment.”

 

Initially, she says, it was alarming to see all the price reductions. But Bediones says because prices had previously gone up so fast, many of the homes were overpriced. Once they adjusted the price closer to the last sale, the buyers showed up.

Glen Fujihara, Realtor and partner at Prudential Locations, recommends sellers pay particular attention to what properties sold for — not what other sellers are asking for their property.

 

“Sellers need to look at sales prices — not listing prices,” says Fujihara, who works primarily in Kahala and Diamond Head. “Don’t say ‘But the next door neighbors are listed for $3.5,’— that’s irrelevant. You need to look at sold comps. Buyers know how much things are worth. And that’s evident when you’re accurate in your pricing ... you may even generate multiple offers.”

 

Days on the market has increased and is about the only real measurable change in the high-end market when compared to a year ago — logical when considering the extra time it takes for those sellers to get realistic about their price.

Fujihara, who contends that the $2.5 to $5 million segment has been less affected by the changing market, says the perception is that prices in Kalaha are going to drop.

 

“They’re not,” he says. “The Kalaha/Diamond Head market is very unique. The buyers are more affluent — they aren’t buying a second home, we’re dealing with people who have three or four homes. They tend to purchase with cash.”

 

Kahala, he says, is functioning on a whole different set of variables. Because of the Mainland and international appeal, the value and demand is more stable.

 

“It’s the opposite of what people expected,” says Fujihara. “But the high-end markets aren’t affected by the things that affect other markets — they tend to go on at their own pace.”

 

 

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