The real state of Hawaii's real estate

By LISA SCONTRAS
Custom Publishing Group

It's anyone's best guess whether the Hawaii housing market is seriously cooling down or is simply leveling off before prices start to climb again.

Some analysts fear that falling home prices and peaking foreclosures on the Mainland will ultimately translate to a bleak outlook for our islands. But the facts — the current state of real estate in Hawaii— perhaps tell a different story.

Mark Twain once quipped, "Get your facts first, then you can distort them as much as you please."

Take away the conjecture and the forecasts, the optimism or the pessimism, and what you're left with are the cold hard facts.

Inspired by a special report, "The State of Real Estate," produced by Prudential Locations this month, here is where things stand on the Hawaii real estate front today. For a copy of the report, call Prudential Locations.

Inventory is up slightly in 2008. According to the Honolulu Board of Realtors, there were 1,924 single-family homes and 2,476 condos on the market in February compared to the 1,717 single-family and 2,294 condos that were listed in February 2007. Though not drastic, the increase in inventory gives buyers more homes from which to choose and challenges sellers to make their property stand out.

Days on the market — which tracks the number of days between the list date and the contract date — is slightly better than it was a year ago. In February 2008, it took approximately 59 days to sell a single-family home compared to the 70 days it took in February 2007, according to HBR data. It took 50 days to sell a condo this past February, as opposed to the 59 days it took in February 2007. While this is longer than the 15 to 37 days it took to sell property in 2005 — the year with the fastest DOM recently — it beats by far the nearly 100 days it took to sell a property in 1995.

Board statistics show the number of sales figures significantly down when comparing statistics from February to a year ago — 40.1 percent fewer single family homes and 20.1 percent fewer condominiums sold this year.

But median sales prices — the statistic that perhaps is more important than any to buyers and sellers — shows single-family homes prices only slightly off and condominium prices up from a year ago. Median price for single-family homes was reported at $599,000 — down 2.5 percent from last year — and for a condo was up 4.7 percent from $320,000 to $335,000.

New construction continues on Oahu — particularly with high-end, high-rise condos in the Downtown, Kakaako and Waikiki areas.

Foreclosures are still relatively low. Hawaii has the lowest mortgage delinquency and default frequency in the country, according to economic data gathered by Bank of Hawaii.

The weak dollar may attract new demand from foreign investors. Dr Mike Sklarz, president and global head of research at New City Technology, says "A large concern is the subprime situation causing California home prices to decline more significantly such that investors and second home interest is impaired.

"While there is significant potential for growth from international markets such as China, this demand is unlikely to offset the loss of California buyers over the next several years."

There is still a finite supply of land in Hawaii with some of the world's most famous beaches.

Bill Chee, CEO at Prudential Locations and 30-year veteran in the Hawaii real estate industry says, "Hawaii is somewhat insulated from the housing troubles on the Mainland, and the market here is indeed different — our finite supply of land is one advantage, as is our appeal as a place to own a second home for vacation or retirement, the steady influx of military personnel, and tight mortgage lending laws which have protected us from the mortgage crisis."

Interest rates are lower than they've been in months.

"With interest rates at historic lows, buyers will benefit from moving quickly in this market," adds Chee.

"The median sales price for Honolulu single-family homes dipped below the $600,000 mark for the first time in almost three years, but the condominium price tied its all-time high record," added Harvey Shapiro, research economist at the Board of Realtors. "The prices being paid demonstrate the stability of our residential markets compared to the downturn in the housing markets on the Mainland."

 

 

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