Sales of single-family homes and condominiums on Oahu tanked in May as owners and buyers elected to practice social distancing.
The Honolulu Board of Realtors reported Saturday that May single-family homes sales fell to 248, a 22.5% year-over-year drop. Meanwhile, condominium sales declined to 254, a 51.2% decrease compared with May 2019.
HBR said the median sale price for a single-family home in May rose 3.5% to $797,000, while the condominium sale price declined by 4.4% to $399,000.
“The year-over-year statistics are what we expected — the number of sales were down and median prices remained relatively steady due in large part to lower than usual inventory and continued high demand,” said Tricia Nekota, president, Honolulu Board of Realtors, in a statement. “As the state continues to reopen, we are already seeing a steady increase in activity that, in turn, helps to drive our local economy.”
On Friday, Honolulu lifted restrictions on real estate operations, allowing for open houses with certain requirements, including limiting the number of attendees to 10.
“While we’re allowed to restart open houses this weekend, our top priority remains the health and safety of sellers, buyers and agents. Strict guidelines for social distancing, use of face masks, and good hygiene practices are some of the many practices that we will continue to implement,” added Nekota.
John Riggins owner of John Riggins Real Estate, said May real estate sales fell mostly because “people just didn’t want people going into their homes.”
It’s unclear how much the return of in-person open houses will propel Oahu’s real estate market forward, Riggins said.
“Our company has decided not to start having open houses, and we’ll still be doing showings by appointment where we can practice more social distancing,” he said. “There’s still demand for Hawaii, but frankly, I’m expecting Oahu’s real estate market will continue deteriorating a little more until we see tourism come back. Tourism impacts so many people and so many small businesses.”
Riggins said the state’s mandatory 14-day self-quarantine for interisland and out-of-state passengers and other lockdowns has affected real estate as much as tourism. The lockdowns slowed some military and federal transfers as well as home-buying.
An emergency order issued by Honolulu Mayor Kirk Caldwell making it illegal for transient short-term rentals to operate, on top of the zoning crackdowns that occurred last year, also has made it more difficult, in some cases, to attract real estate investors, he said.
Also, condominium sales took a dip as some buyers steered clear of places with elevators and other public spaces, Riggins said.
Still, Riggins said he’s not overly pessimistic about the market, which he thinks will rally nicely once tourism returns and lockdowns are lifted.
“I think it’s going to bounce back much quicker than the last downturn, which lasted from about 2007 to 2015,” he said.
HBR said it was a positive sign that new listings increased by 17% in May compared with April, while the volume of listings going into escrow saw a 32% increase from April to May.
While unemployment and tourism lockdowns continue to affect the local market, favorable interest rates have made home-buying even more attractive for those who are in a position to purchase. Low rates also have helped make home-buying more affordable on Oahu, where affordable housing remains scarce.
At the end of May, the 30-year fixed mortgage rate averaged 3.15%, a low that has dipped even further. The Mortgage Bankers Association has reported that mortgage applications were up 18% from a year ago and up 54% from early April to late May.
There are signs of pent-up demand in the May market, especially for single-family homes, said Margaret Murchie, a Coldwell Banker real estate broker and vice president who is based out of the Diamond Head Kahala office.
“I’m seeing more interest in single-family homes. Some buyers want more space, and many are finding that condominium maintenance fees are pretty high, even in the old buildings,” Murchie said.
Sales will pick up as more inventory becomes available, she said. However, whether pricing holds will depend a lot upon whether Hawaii’s high unemployment rates and weak economy cause too much inventory to come into the market at once, Murchie said.
“If the economy doesn’t improve, people who are laid off or furloughed will think about moving. We could get such a glut of inventory that prices go down,” she said. “We’re not seeing it too bad yet, but in the midst of the uncertainty, we are seeing it, depending on the seller’s circumstances. Some buyers are asking for concessions.”