Limited inventory pushes Oahu home prices higher

In 2010 the home at 91-1012 Hoomaalili St. in Ewa Beach was a "fantastic opportunity" listed for sale at $600,000.

Last year it was a must-see with "too many upgrades to describe" and still priced at $600,000.

Then in March the same house was re-listed without any attractive descriptions, and the price was upped to $615,000, then $640,000 in an effort that resulted in a sale last month for $640,000.

That sale was a reflection of Oahu’s recovering housing market, which seems to have shed the weakness of the past four years and achieved median price gains this year through July based on relatively flat sales volume.

A report released Tuesday by the Hono­lulu Board of Realtors said the median price for single-family homes sold last month was $635,000 — up 7.4 percent from $591,000 in the same month last year and the second-highest median price for any month this year after $664,000 in May.

So far this year, the median single-family home price is up 7.8 percent at $620,000 from $575,000 at this point last year. The median price is a point at which half of all sales was for more and half for less. The median price has been up in every month this year compared with last year.

Patrick O’Neill, principal broker with Distinctive Homes Hawaii LLC, said July was his firm’s best month for sales in more than a year. "It’s been phenomenal," he said.

Local economists say a recovering economy and record-low interest rates are motivating more prospective buyers, while relatively low inventory and a dearth of new housing construction are driving prices higher and limiting sales.

"There’s no question there’s upward pressure on prices," O’Neill said. "Anything that is priced right is receiving multiple offers the day it comes on the market."

Joe Paikai, president of the Hono­lulu Board of Realtors, said July was an exceptional month for Oahu’s housing market given median prices and sales volume. He also said activity in the fall should be "great" based on pending deals.

The trade group’s report counts sales of previously owned homes that closed in July and typically reflects sales contracts signed one to three months prior.

The number of single-family home sales in July was up 5.6 percent to 265 from 251 in the same month last year. There were 364 condominium sales, up 21.3 percent from 300 in the same comparable period.

The median condo sale price surged 15.5 percent to $320,000 last month from $277,000 a year earlier to a high for the year after $319,000 in April.

Last month’s median condo price represented this year’s biggest gain for any month on a percentage-point basis, though that was partly because the July 2011 figure was a roughly seven-year low.

For the first seven months of the year, Oahu’s median condo price is up 3.3 percent to $310,000 from $300,000, and has risen in four of seven months compared with the same months last year.

Homes sold last month spent a relatively short time on the market — a median 25 days for single-family homes and 29 days for condos. The single-family home market time was the lowest since October 2005, while the condo market time was last lower in June 2010.

The relatively quick timing for most sales is in part due to relatively few homes listed for sale. There were 1,219 single-family home listings last month, which was down from 1,511 a year earlier and 2,100 four years ago. There were 1,724 condos on the market last month, down from 1,971 a year earlier and about 2,700 four years ago.

Based on July’s rate of sales, inventory of homes on the market would be consumed in 3.6 months for single-family homes and 4.1 months for condos if no new supply were added. That compares with 5.9 months and 6 months, respectively, a year earlier. Months of remaining inventory got as high as 16 in 2009.

Factors such as the low inventory and rising demand along with the improving local economy led by record tourism are reasons why the University of Hawaii Economic Research Organization recently predicted that Oahu’s annual median single-family home price will rise between 7 and 9 percent this year and in each of the next three years. That equates to a median price of $672,000 next year, $720,300 in 2014 and $787,400 in 2015.

The prior annual median price peak for Oahu single-family homes was $643,500 in 2007.

And for the Hoomaalili Street house that sold last month for $640,000 but didn’t sell for $600,000 a year or two ago, the peak price was $738,924 in 2005 when it was brand new.