Oahu’s string of record home prices upset in 2019

It happened by the slightest of margins, but something happened in Oahu’s housing market last year that hadn’t occurred in almost a decade: an annual median price decrease.

The median price for single-family homes sold on the island slipped by $1,000 — or just 0.1% — to $789,000 last year from a record $790,000 the year before, according to a report from the Honolulu Board of Realtors released Monday.

The dip ended a string of consecutive annual median price gains that had stretched back to 2012.

Still, part of the market did extend the run of price gains last year. The median sale price for condominiums edged up 1.2% to a record $425,000 last year from $420,000 the year before.

The Honolulu Board of Realtors, a trade association representing real estate agents, characterized the market last year as a “steady and stable” one that included more inventory for sale and relatively flat median sale prices.

“These conditions, paired with low interest rates and favorable economic conditions continuing to drive healthy market activity, create an advantageous environment where buyers have purchasing power and sellers have more potential buyers for their properties,” Tricia Nekota, president of the board and an agent at Vesta Hawaii Real Estate, said in a statement.

Many homebuyers and sellers in Hawaii’s biggest residential real estate market may have grown accustomed to seeing both single-family home and condo prices rise in a trend that stretched back to 2012. And they should continue to expect small increases in the next few years, according to economists at the University of Hawaii.

The University of Hawaii Economic Research Organization last month issued a report that forecasts median home sale prices on Oahu will rise about 1% to 2% for single-family homes and about 2% to 3% for condos annually through 2022.

That projection compares with annual increases between 3% and 8% for both housing types from 2012 to 2018.

UHERO’s projection is based on factors that include slowing growth in Hawaii’s economy and three years of population declines.

“Hawaii’s economy has entered a soft patch,” the report said.

Helping support a steady housing market are factors that include historically low unemployment and mortgage interest rates.

The Honolulu Board of Realtors noted in its report that 2019 ended with the average 30-year fixed mortgage interest rate below 4% compared with 2018 when rates rose to near 5%.

As the average rate moved from about 4.5% in the beginning of last year to about 3.7% toward the end of the year as reported by Freddie Mac, home sale volume on Oahu appeared to respond. During the first half of last year, home sales were largely down from the year before, but that shifted to more sale volume gains in the second half of this year.

Sale volume for the whole year ended up mixed, with the number of single-family home sales rising 4% to 3,750 from 3,609 the year before. For condos the number of sales decreased 5% to 5,408 last year from 5,679 in 2018.

In December the sale trend held true with a spike in single-family home sales and a small decline for condos, while median prices were up for both segments of the market.

The number of single- family home sales last month jumped 19% to 309 from 259 in December 2018. Condo sale volume slipped 3% in December to 428 transactions from 440 in the same month the year before.

The median price for single-family homes sold in December rose 4% to $820,000 from $788,000 in the same month in 2018. For condos sold in December, the median price rose 7% to $425,500 from $398,500 in the same month of 2018.