Home prices hint of pickup in market

Is Oahu’s housing market on track for a second rebound in three years?

Activity in recent months might suggest so, at least for median sale prices of single-family homes, especially after factoring sale results for February released by the Honolulu Board of Realtors Wednesday.

The median price for previously owned single-family homes sold last month rose 9.6 percent to $625,000 compared with $570,000 a year earlier.

The gain was the biggest in four consecutive months of positive movement for median prices. November eked out a 1 percent gain from a year earlier, followed by a 3.4 percent rise in December and then 8.6 percent in January.

February’s gain was the biggest year-over-year rise for any month since August 2010 when the median price jumped 15.2 percent.

To be sure, four months is too soon to declare a trend, according to some analysts. But some real estate agents see the recent rises as momentum after median prices declined in nine of 12 months last year.

"I think there are lots of reasons to be very encouraged," said Scott Higashi, executive vice president of sales for Prudential Locations.

Higashi noted that a relatively low inventory and relatively short period most homes spend on the market before selling is helping raise prices. "I think it suggests a market poised for greater momentum both in prices and sales," he said.

If a turnaround is emerging, it would reverse the 3 percent decline in last year’s single-family home median price. A rebound this year also would constitute a second rebound in three years, or a recovery from a double dip. That’s because a 3 percent median price rise in 2010 was declared a rebound after two previous years of declines.

Some economists doubt the market is poised for a recovery now. Rather, they expect more of a flat period for median prices.

Paul Brewbaker of TZ Economics said late last year that choppiness in median prices can happen in some months but he expects a general sideways movement will prevail possibly for a few years until more robust economic growth takes hold.

The University of Hawaii Economic Research Organization last month forecast the median price for Oahu’s single-family homes will be flat into next year, then accelerate with 10 percent growth by 2014.

"Home prices are expected to remain soft for the next year or so, until economic conditions improve and the foreclosure overhang is worked through," the report said.

"Once that begins to happen, the dearth of new building will set the stage for resumed price appreciation."

One factor that typically precedes a rise in prices is a rise in sales. The number of single-family homes sold last month jumped 19.9 percent to 217 sales compared with 181 sales a year earlier. But in December and January sales volume was down 14.1 percent and 12.1 percent, respectively.

In Oahu’s condominium market, both the median price and sales sagged in February. There were 227 condo sales, down 23.1 percent from 295 a year earlier. The median price slipped 1.6 percent to $315,000 from $320,000 in the same period.