Indicators Show Buyers Feel It Is an Excellent Time to Buy on Oahu
With the additional inventory, sales activity is already heating up before the summer months.
Kalama Kim, Principal Broker of Coldwell Banker Pacific Properties says, “Demand for homes continues to escalate evidenced by the increase in home and condo sales through March, which increased by over 17%.” According to the National Association of Realtors, 75% of people believe now is a good time to buy a home with 40% believing it strongly. Also, NAR reports the millennial generation made up one-third of the buyers in 2015 and this group’s momentum is expected to pick up, further providing a boost in the home-buying market. “Mortgage interest rates are definitely part of the motivation, since they have not increased as projected allowing purchasers to afford more or save money on their monthly mortgage payments.”
The extra purchasing power provided by low interest rates is needed since the median sale price of a single-family home in 2015 reached $700,000, up from the 2007 high of $643,500, before the “Great Recession.” The Honolulu Board of Realtors has tracked the MSP since 1985, and reports prices have gone up 341.4% in 31 years — an average of 4.91% annually. The year-to-year steady return on investment, makes real estate on Oahu worth buying.
Kim points out that one of the attributes of this market is the slow increase of new development in Oahu. “With the influx in new developments in Kaka‘ako and the Ewa Plain, buyers get enamored by the new model homes and sometimes have to get picked in a lottery to get one,” says Kalama Kim. President of Coldwell Banker Pacific Properties, Mike James, says, “While we have seen an increase in new development, we need the trend to continue and even escalate to keep home prices affordable in Hawaii.”
With rising sales prices rents are also on the rise. And fewer rentals are available, providing additional motivation for renters to look into buying a home.
Island housing stats show a hefty 21.7% bump in the number of single-family sales that closed in March: 297 single-family homes sold in March, compared to 244 in March 2015. The number of condos that closed in March was also up 21.8%: from 403 that closed in March a year ago to 491 last month.
The median price of a single-family home in March was $725,000, a 3.6% gain from the same time last year. Notably, the year-to-date MSP for single-family homes is already up 7.2% over 2015, jumping from $676,000 for the first three months in 2015 to $724,900 as of April 1.
The MSP for a condo on Oahu was $385,000, up 1.3% from $380,000 in February 2015. After the first three months, the year-to-date MSP is up 4.5% to $380,000.
“We continue to receive multiple offers on the majority of the listings we market for sale,” says Kim.
Hot markets are those neighborhoods where sellers realized 100% or more of their original asking price.
Kalihi – Palama: 103.7%
Makiki – Moiliili: 100%
Mililani: 100.6 %
Pearl City – Aiea: 100.6%
Ewa Plain: 100.2%
Hawaii Kai: 100%
Kapahulu-Diamond Head: 100%
Makiki- Moiliili: 100.3%
Source: Honolulu Board of Realtors®, compiled from MLS data March 2016
If you’re thinking of selling your home anytime soon, this would be a good time to list, before interest rates begin to rise.