Hawaii real estate agents are essential workers during the coronavirus pandemic, but the local housing market is in turmoil.
Oahu home sale statistics for March released Monday largely don’t reflect dramatic impacts happening now, including sellers postponing sale efforts, buyers not being able to complete purchases because of income losses and a prohibition on open houses.
“The slowdown is just beginning,” said Brandon Lau, a partner at ChaneyBrooks Choice Advisors.
With so much uncertainty as to the scope of COVID-19 spreading in the state, Lau can’t reasonably guess what home sales in the next few months will be like. However, the industry is adjusting to keep the market alive.
Changes include virtual home tours and mandatory digital document signing to sustain business.
“Housing is essential,” said Suzanne Young, CEO of the Honolulu Board of Realtors. “We all need housing.”
In March the number of residential property sales on Oahu rose for single-family homes and fell for condominiums, while median sale prices rose less than 4%, according to data from the trade association.
There were 303 single-family home sales last month, up 9.8% from 276 in the same month last year. Condo sales fell 12.2% to 410 from 467 in the same period.
The median price for single-family houses sold in March edged up 3.5% to $810,000 from $782,500 a year earlier. The condo median sale price achieved a 1.4% bump to $435,000 from $429,000 in the same period.
Tricia Nekota, president of the association and an agent at Vesta Hawaii Real Estate, noted in the market report that most sales last month entered escrow at least 30 days before local government orders for residents to stay at home except for essential activities.
Sales in the report reflect purchase agreements typically reached one to three months earlier and following research that typically includes visiting properties.
“While the (sale) numbers illustrate the market is holding strong, we’re only beginning to see the changes in activity,” Nekota said in the report.
In one hint of the expected downturn ahead, the report showed a drop in the number of sale listings added in March. New single-family home listings fell 16.7% to 390 last month from 468 a year earlier. New condo listings fell 14.3% to 610 from 712.
A significant number of active listings were also moved temporarily to off-market status, the report said.
Total listings for single-family homes fell 17.9% to 1,227 for March from 1,495 a year earlier. The same figure for condos fell 3.2% to 2,274 from 2,349.
“These stats are likely an early reaction to economic uncertainty and indicative of a shift in market activity due to the impacts of COVID-19,” Nekota said in the report.
Bryn Kaufman, principal broker and owner of OahuRe, said he has already seen sellers drop prices in anticipation of a market slump. He added that one of the biggest disruptions to sales will be loss of income for some prospective buyers.
More than 160,000 Hawaii residents have filed unemployment claims since the beginning of March.
Lenders make an income verification check shortly before a sale closes, and brokers have seen sales derailed at the last moment recently.
“It hurts,” Kaufman said.
Some of these derailed sales may be only paused, and could resume once an expected economic rebound occurs.
Another challenge in the market is social interaction restrictions under local government emergency proclamations.
In response to requirements for social distancing, the Honolulu Board of Realtors on March 24 advised members not to hold open houses. The organization also has eliminated open-house information from its multiple listing service through May 1.
Young said about 300 open houses were typical during weekends in recent times before COVID-19 was detected in Hawaii.
Brokers are working around this in ways that include providing home tours by appointment, virtual walk-throughs that stitch together 3-D images inside homes, video phone call showings where a broker in a home shows a client live images while conversing, and prerecorded videos showing a home with agent commentary on features.
Still, even these options can present problems. For instance, some sellers still living in their home are no longer comfortable with buyers or brokers being in their homes even alone for fear that the new coronavirus could be left on a surface.
Also in some cases, rental tenants might object to the presence of buyers or brokers over the same health concern even in instances where the homeowner has a contractual right to show the property.
“Under these times you can understand the tenants’ concern,” Kaufman said. “You’re very concerned about who’s walking through the house.”
In other cases, brokers are setting up what Lau described as sanitation stations at the front door with disinfectant wipes, masks and gloves. Young added that in some cases homes are cleaned after a showing by appointment.
“It’s not like the market has stopped,” Kaufman said. “There are still buyers out there, absolutely.”
The number of homes sold on Oahu in March with the median price and percentage change from the same month last year:
SALES MEDIAN PRICE
March 2020 303 $810,000
March 2019 276 $782,500
Change 9.8% 3.5%
SALES MEDIAN PRICE
March 2020 410 $435,000
March 2019 467 $429,000
Change -12.2% 1.4%
Source: Honolulu Board of Realtors