The countless gloom and doom stories about falling real estate prices and skyrocketing foreclosures on the mainland cause homeowners to wonder if Oahu is next. There’s no way to know for sure if Oahu’s condo market is cooling or just taking a rest before prices rise again. Some important facts are listed below…you decide for yourself.
Inventory has been rising for three years. In May 2005, Oahu reached a 20-year low point of 935 units for sale compared to 2476 units on the market in February 2008.** That increase provides buyers with more choices and compels sellers to make their property stand out, both in appearance and in price. Furthermore, new construction projects continue adding units in the Downtown (Capitol Place, The Pinnacle Honolulu), Kakaako (Keola La’i, Moana Vista) and Waikiki (The Watermark Waikiki, Allure Waikiki, Trump International Hotel & Tower) areas.
Oahu median condo sales prices have risen every year since 2001 and 2007 was no exception, despite what the national press would have you believe. However, the number of units sold peaked in 2005, fell in 2006 and dropped again in 2007. The days on market (time between listing date and contract date) hit a low of just 13 days in July 2005. Days on market for Oahu condos was up to 50 days in February 2008.**
According to the Bank of Hawaii “Hawaii Economic Trends” report dated January 30, 2008, “Sub-prime mortgage exposure in Hawaii is comparatively small. Hawaii’s mortgage delinquency and default rates remain fractions of national norms, on average and on a cyclically-adjusted basis. Currently, Hawaii has the lowest mortgage delinquency and default frequencies in the U.S.”
Interest rates are still near historic lows, allowing buyers to buy more home for their money.
The weak U.S. dollar makes Oahu real estate very attractive to foreign investors. However, the housing market turmoil experienced in some mainland markets such as California will dampen demand for second homes. This may offset the increased foreign demand.
Oahu’s land supply is limited and we have legendary beaches. That’s not going to change.
** Statistics derived from the Honolulu Board of Realtors Monthly Statistical Report dated March 3, 2008.
If you have questions, please contact Michael Zimmerman.
