Oahu’s housing market showed some pop in July with two price records after a rather moribund start this year through June.
New median sale price high marks were set for single-family houses at $835,000 and for condominiums at $461,500, according to Honolulu Board of Realtors data released Tuesday.
It had been close to a year since median price records in any single month were set on Oahu.
The old records were $812,500 for single-family homes in September and $435,000 for condos in March 2018.
Local real estate agents tied the peaks last month at least partly to recent declines in mortgage interest rates that allow buyers to pay more for homes.
“Lower mortgage interest rates may have enabled buyers to consider a slightly wider price range,” Jenny Brady, Honolulu Board of Realtors president and an agent with Hokua Hawaii Realty LLC, said in a statement.
Brady noted that there were 80 single-family home sales last month for between $900,000 and just under $1.2 million compared with 51 sales in the same range a year earlier. The same boost happened in Oahu’s condo market, where there were 149 sales between $500,000 and almost $700,000 in July compared with 106 sales in that range a year earlier.
Average interest rates for 30-year fixed-rate loans dipped below 4% in May after being at about 4.5% since the start of the year and between 4.5% and 5% most of last year, according to Freddy Mac. For the past two weeks, the average was 3.75%.
The July home sales reflect completed transactions that typically stem from contract agreements made one to three months earlier. The median price is a point at which half the sales were for more and half for less.
John Connelley, principal broker at local brokerage firm Locations, said in a report that other factors helping produce sale price peaks last month include stronger buyer demand and summer being a peak period for sales.
Connelley cautioned not to read too much into records set in a single month because one month doesn’t automatically reflect a trend or momentum.
“While it is easy to get excited about a big number, it is important to consider that monthly trends vary,” he said in the Locations report, noting that median prices are flat over the last 12 months.
The $835,000 median price for single-family homes in July was up 5.8% from $789,500 in the same month last year. Yet for the first seven months of the year, the median price was $785,000 — a scant 0.3% higher than $782,388 in the same period last year.
For condos, July’s $461,500 median price was up 7.5% from $429,500 a year earlier. That compares with $425,000 for the first seven months of this year and last year.
An even bigger divergence exists for sales volume between July and the first seven months of this year.
The number of single-family home sales last month jumped 12.7% to 372 from 330 a year earlier, but sales are down 1.1% this year through July.
For condos, sales edged up 2.2% to 513 in July from 502 in the same month last year, but volume is down 7.2% for the first seven months of this year.
There has been much speculation as to whether home sale volume will get a boost from homeowners who have been illegally renting their property in residential neighborhoods as short-term vacation rentals after a new city ordinance cracking down on the long-ignored practice took effect Thursday.
Part of the speculation is that homeowners who rely on high daily rental rate income to pay for mortgages that they wouldn’t be able to afford with income from long-term rentals to residents will flood the market with inventory for sale.
The city Department of Planning and Permitting estimates 6,000 to 8,000 illegal vacation rentals exist on Oahu, although some put the number as high as 20,000.
The city said Tuesday that DPP is investigating “a couple hundred” violations of the ordinance, which stemmed from Bill 89, passed unanimously by the Honolulu City Council in June.
Connelley said in the Locations report that not enough time has elapsed to gauge expected impacts from the ordinance on Oahu’s housing market.
“Property owners will do one of three things; continue to do what they are doing now, sell the property or convert the property into a long-term rental,” he said. “It is simply too early to know the impact of Bill 89 on the market.”
JULY / SALES / MEDIAN PRICE
2019 372 $835,000
2018 330 $789,500
Change 12.7% 5.8%
JULY / SALES / MEDIAN PRICE
2019 513 $461,500
2018 502 $429,500
Change 2.2% 7.5%
Source: Honolulu Board of Realtors