There are signs in Oahu’s housing market that the pendulum is beginning to swing back in favor of sellers.
Rising prices, a shrinking inventory of unsold homes and sellers receiving multiple offers in some areas of the island all point to a recovery in the market this year, industry officials say. In addition, an increase in "pending sales" — where a buyer has accepted a contract but the sale has not yet closed — bode well for the market.
Oahu’s $645,239 median sales price in August was the highest in more than two years, easily besting $560,000 recorded in August 2009 and $604,500 in July, the Honolulu Board of Realtors reported yesterday.
Condominium prices also rose in August, with the median of $307,500 topping $290,000 a year earlier and $300,000 in July.
"Inventory is so low in some areas that when something comes on the market and is priced to sell, we’re getting multiple offers. And that can drive up the price," said Suzanne Yen, a broker with East Oahu Realty.
"That’s true for a place like Hawaii Kai. When a property is priced right, people are jumping in," she said.
If the single-family home price rises for the full year, it would reverse two years of declines — 3 percent in 2008 and 8 percent last year.
One negative in the report was a decline in sales volume for both single-family homes and condominiums, which the Board of Realtors attributed to the end of a federal tax credit for homebuyers. The number of single-family homes that sold fell to 224 from 239 in August 2009 and 269 in July. Condo sales slipped to 289 from 348 a year earlier and 327 in July.
Although sales volume was down, homes sold at a faster pace, said Brian Benton, president of the Board of Realtors. Single-family homes were on the market for an average of 32 days, down from 49 days in August 2009. For condos, the number of days on the market fell to 33 from 53 a year earlier.
"It’s a strong indicator that the homes are priced right. They’re being snapped up right away," he said.
The inventory of unsold single-family homes on Oahu fell to 1,526 in August, down from 1,850 in August 2009. At the current pace of sales, it would take 6.5 months to liquidate the inventory of unsold homes, down from 9.1 months in August 2009.
"Anything under 6 months indicates we’re in a sellers market," Benton said.
Another indicator that the market is beginning to swing in the sellers’ favor is that homes are selling closer to the asking price than they were a year ago. According to the Board of Realtors, sellers received 94.8 percent of their asking price in August, up from 93.6 percent a year earlier.
"As that percentage gets closer to 100 percent, it is an indication that we are trending into a sellers market," Benton said.
The number of pending sales soared to 360 in August, up 45 percent from 248 a year earlier. As those sales close in the coming months, they will boost the overall numbers, Benton said.
Another factor that bodes well for homes sales going forward is interest rates, which are near historic lows.
The average rate for a 30-year fixed loan was 4.32 percent last week, down from 4.36 percent last week, according to mortgage buyer Freddie Mac. That’s the lowest since Freddie Mac began tracking rates in 1971. Last year at this time, the 30-year mortgage averaged 5.08 percent.
Yen, the East Oahu Realty broker, said it’s important to note that the recovery in Oahu’s housing market has varied widely depending on the neighborhood.
Hawaii Kai, for example, experienced increases in both sales volume and price in August — 40 percent and 12 percent respectively when compared with a year ago.
In the Ewa Plain, however, the number of homes sold fell 45 percent, while the median price declined 8 percent.
The high number of short sales in that area is slowing things down because of the paperwork involved, Yen said.
"The listed homes that are priced right do have offers on them, but it’s taking three to four times longer to get a short sale home sold versus one that is not, and the short sales are dominating that market right now," Yen said.
It’s not unusual for a lender to take three to nine months to process the paperwork on a short sale — a situation in which a bank accepts an offer for less than the mortgage on a home to avoid a foreclosure.
Makaha is another area that is struggling, she said. While it took an average of 33 days to sell a condominium on Oahu in August, it took 205 days in Makaha.