Supply and Demand Continue to Drive Oahu Housing Market
High levels of demand and a shortage of supply continue to fuel the rise in Oahu housing prices. Even with booming construction, developers have not built enough housing units to keep pace with demand.
“The low inventory-high demand trend continues to define our residential real estate market. During the month of August, the percent of list price a buyer had to pay to purchase a home was 99.8% illustrating the continued frenzy of sales buyers are creating in the market,” says Kalama Kim, broker in charge at Coldwell Banker Pacific Properties. “One way to stem the tide would be to build new homes on the island or build Additional Dwelling Units (ADU) on existing properties. The price range with the greatest need for inventory is between $475,000 and $650,000 for single family homes. At the current rate of sales, all inventory in that range would be sold out in less than 60 days.”
Besides bringing supply and demand into balance, low mortgage interest rates continue to motivate buyers to take advantage of increased buying power. Sales are being made at electrifying rates. Single-family homes are selling in a median 16 days on the market —20% faster than a year ago. Condos are selling in a median 15 days on the market — also at a speedy pace, and 21.2% faster than August 2015.
The number of single-family sales closing escrow last month equaled the number of closings during the same month last year — 344. The year-to-date stats, however, show that sales volume figures are outpacing last year’s rate by 5.5%.
Condominium sales are following a similar track. Year-over-year, there were 481 closed sales last month, 9.3% higher than closings a year ago, which totaled 428. Year-to-date figures are maintaining a 9.3% increase in sales during the first eight months of 2015.
While the number of home sold this year has increased, they’ve done so in a thinner market. The number of available listings — in both single-family home and condominium segments — are down. The number of active single-family home listings in August was down 5.8% from the same time a year ago. In August 2015, there were 1,354 active listings, compared to only 1,275 active listings last month.
Similarly, the number of active condominium listings in August was down 4.2% from the same time a year ago. In August 2015, there were 1,876 active listings, compared to only 1,798 active listings last month. These stats are an example of how supply is down, while demand is strong, pushing prices higher.
The median sales price for a single-family home on Oahu was up 6.9% to $747,500 from $699,000, the MSP in August of 2015.
The median price paid for a condominium was $398,000, up a dramatically 12.4% from last year’s median of $345,000.
Nationally, Coldwell Banker Real Estate LLC released its 2016 Home Listing Report, which ranks the average listing price of 4-bedroom, 2-bath homes in more than 2,000 markets across the country. Hawaii has again been named the priciest state in the nation in which to buy a home. Turns out, the average listing price of a 4-bedroom, 2-bath home here is $904,954, a whopping $325,000 more than the second-priciest state, Massachusetts, where the same sized home costs $577,855.
The Coldwell Banker report further points out the average price of a 4-bedroom in Honolulu is $1,202,219, in Kapolei it’s $708,800, and in Ewa Beach it’s $653,129.
“Like many areas across the country, home prices trend downward the further you travel away from the urban core,” says Mike James, president of Coldwell Banker Pacific Properties. “Honolulu’s $1,202,210, average list price is almost double the price of Ewa Beach, which is Oahu’s most affordable city in the report. Ewa Beach has become extremely popular because of the affordable home prices, the opportunity to purchase a brand new home, the rapid growth of services and being that it is only 20 minutes away from downtown Honolulu.”
With Oahu housing prices on a seemingly endless rise and with the number of first-timers looking to buy a home, we are listing Oahu’s hot markets as those neighborhoods where the median sale price of a single-family home is still near or under $750,000 (in July 2016). This tabulation should provide encouragement and a variety of options for those looking to buy their first home.
Single-family home hot neighborhoods:
Ewa Plain: $649,000
Makaha — Nanakuli: 445,000
North Shore: $756,000
Pearl City — Aiea: $740,750
Windward Coast: $735,000
Source: Honolulu Board of REALTORS®, compiled from MLS data. August 2016