Rising Inventory Offers More Options for Prospective Homebuyers
Homes sales on Oahu remain robust as the median sales price of a single-family home increased again in October — marking the eighth consecutive month of price gains. With the exception of February, prices have increased or remained stable for 14 months, since August 2014.
The cause for the current run up is mostly attributed to a combination of insufficient inventory to meet demand and continued low mortgage interest rates. Kalama Kim, principal broker at Coldwell Banker Pacific Properties, points out economic factors have contributed as well.
“The low mortgage rates — which remain at 4% or less — have increased buyer purchasing power allowing them to afford more home for their money. Zero-money down loan programs like VA and USDA have also allowed more people the opportunity to be homeowners in this market,” Kim adds. “A lower unemployment rate and an increase in wages has instilled potential buyers with confidence that they will continue to have a steady income, which they can use to pay a mortgage and purchase a home.”
Months of Remaining Inventory (MRI) combines supply and demand into a single statistic reflecting how long the number of active listings will last at the current rate of sales. The MRI for single-family homes is 3 months. The MRI for condominiums is 3.4 months. While these are still considered low levels, they are up from a year ago. More inventory means more options for potential homebuyers.
Sales volume, the number of sales, occurring in October showed an increase over stats from the same time last year — there were 313 single-family homes closed on Oahu in October, up 5% from October 2014 when 298 homes sold. In the condominium segment, 454 units closed, up 1.3% from a year ago. Year-to-date, both market segments are up — 4.9% and 4.7% respectively.
Pending sales, which are a count of transactions in escrow waiting to close, also are up in both segments of the market.
“One of the best short-term indicators in the monthly Honolulu Board of REALTORS® statistical report is the change in pending sales each month. Since pending sales are normally going to close within two months after the report, it gives a glimpse into the near future,” says Kim.
“During the month of October, pending sales were up 14.8 percent for single-family homes. The factors that normally contribute to a slowing market include increasing mortgage interest rates and increasing housing supply. We haven’t seen either at significant levels as of yet.”
The median price of a single-family home in October was $720,000 up 4.3%% from the same time last year — the fifth such increase in 12 months when the MSP was $700,000 or higher.
The median price of a condominium on the island is up as well — up to $370,000 from $352,750 this time last year — a 4.9% increase.
All things considered — the current price growth, increase of pending sales, and continued low inventory and low interest rates — strong market conditions are likely to continue during the holiday months of November and December.
“Typically, fewer home listings for sale hit the market in December because sellers don’t want to deal with open houses and showing their property during the holidays,” says Kim. “During the first three weeks of January that reverses itself and new listings flood on to the market. If a seller is ready to sell, they may want to list in December to beat the rush to market in the New Year.”
The neighborhood earning a mention as a Hot Market this month have consistently reported sellers who have received 100% or more of their original price — year-to-date. Check it out: Kailua — Waimanalo made both lists. Source: September 2015 Honolulu Board of REALTORS®, compiled from MLS data.
Hot Single-Family Homes neighborhoods:
Downtown — Nuuanu: 100.3%
Kailua— Waimanalo: 101%
Moanalua — Salt Lake: 100.1%
Hot Condo neighborhoods:
Aina Haina — Kuliouou: 100.2%
Kailua — Waimanalo: 100%
Waialae — Kahala: 100.5%