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Oahu’s residential real estate sales softened in October amid increased inven- tory and rising interest rates.
The median price for a single-family home rose more than 6 percent from October 2017 with half of the homes changing hands for above $800,000 and half for below, according to a report released Tuesday by the Honolulu Board of Realtors. However, single-family home sales during the same period dropped 13 percent to 309 transactions.
The median price for a condominium fell to $390,000, a nearly 2 percent drop from October 2017. During the same period, condominium sales declined more than 9 percent to 443 transactions.
Single-family homes spent a median of 29 days on the market prior to being sold — that’s nearly double the days on the market in October 2017. It took an average of 25 days to sell a condominium in October as compared with 21 days during the same month in 2017.
In October the number of active listings on Oahu was up about 24 percent for single-family homes, which hit 1,431. Active listings for condominiums rose just over 13 percent to 2,085. New October listings for single-family homes stayed flat at 429, but new condominium listings rose to 702, a nearly 8 percent increase from October 2017.
Darryl Macha, president of the Honolulu Board of Realtors, said Oahu’s housing market continues to be a stable environment for both buyers and sellers.
“While sales of residential properties slowed, the median prices remained relatively steady in October, considering the records set earlier this year,” Macha said.
The October results followed a record-setting September where the median price of single-family homes climbed to $812,500, a slight bump from the previous record of $810,000 set in August. But even then these statistics marked the beginning of a shift in Oahu’s housing market with the decline in sales of both single-family homes and condominiums combined with a growing inventory.
Current buyers have their pick of the market, including shiny new homes, and some have been able to secure price reductions on resales in regions where inventory is heavy, said Shannon Severance, a Realtor associate who was named as RE/MAX Honolulu’s Overall Top Producer in 2016.
“Homes are still moving; they’re just moving slower. Buyers are shopping longer for homes, and with interest rates rising they are shopping lenders, too,” Severance said. “Newer homes are doing so much better than older homes. It’s important for motivated sellers to come out of the gate with competitive pricing.”
But even with the increase in days on market, “it is still a seller’s market,” Macha said. That’s because more inventory is needed to meet current housing demand, he said.
“A healthy market should have about six months of inventory. Right now we have around three to four months,” Macha said.
The sweet spot for buyers is now between $700,000 and $800,000 for a single-family home, while it’s around $400,000 to $500,000 for condominiums, Macha said.
Of the single-family homes sold on Oahu last month, 67 were sold in the largest category, the $700,000-to-$799,000 range. Fifty homes went in the $600,000-to-$699,000 range, the second-highest buying category, and 14 homes sold for $2 million or more. In comparison, the most condominium sales, 114, were in the $300,000- to-$399,000 range. The next-highest condominium sales, the $400,000-to-$499,000 range posted 79 transactions. As many as 20 condominiums changed hands for more than $1 million.
In areas where inventory is flush, such as the Ewa plain, there has been some cooling, Macha said. On the other hand, even with more condominiums coming on line, urban Honolulu continues to be in high demand, Macha said.
“There’s been a nationwide shift out of the suburbs and into urban cores,” said Stephany Sofos, an active licensed real estate broker and appraiser on Oahu. “Honolulu traffic will continue to fuel that trend locally.”
Rising interest rates and tax changes, which limit deductions on interest to $750,000 in mortgage debt, also have affected the market and will continue to do so into the future, Sofos said.
“The federal government has said that they want to get interest rates normalized and that there’ll be another three to four increases,” she said. “That’s really going to stretch people.”
For instance, Sofos said if the feds keep increasing interest rates by a quarter of a point, there could be another 1-point rise over the next 18 months or so. That would mean an increase of about $5,000 a year in interest on a $500,000 loan — that’s more than $400 a month extra in mortgage payments, she said.
Increases in state and local taxes would further increase buying costs, Sofos said.
In October, pending sales already were down more than 20 percent for single-family homes and more than 18 percent for condominiums.
The fourth quarter has traditionally been a quiet time for home sales, and Macha said he anticipates that will hold true for 2018.
“There may be a softening of the market, which would not be unexpected,” he said.
home sales
The number of homes sold on Oahu in October with the median price and percentage change from the same month last year.
HOMES
SALES MEDIAN PRICE
October 2018 309 $800,000
October 2018 355 $752,000
Change -13.0% 6.4%
CONDOS
SALES MEDIAN PRICE
October 2018 443 $390,000
October 2017 489 $397,500
Change -9.4% -1.9%
Source: Honolulu Board of Realtors
ON THE MOVE
Olomana Loomis ISC has added the following new members to its team:
>> Lauren Regan is the new marketing and communications specialist for Olomana Loomis ISC. Regan previously worked in the public relations department at Fox Broadcasting Co. and Diane von Furstenberg and SingerLewak, an accounting firm in Los Angeles.
>> Michael Fujimoto is the the firm’s new communications manager. Fujimoto has public relations experience and served as an assistant clerk for the Committee on Human Services for state Sen. Suzanne Chun Oakland and as a clerk for the Committee on Economic Development and Technology for state Sen. Glenn Wakai.
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