Key Factors: Inventory and Lending Will Drive 2015 Housing Market
The first set of statistics for 2015 were released by the Honolulu Board of REALTORS® this week showing prices continuing to rise, though the number of closed sales during the month were down compared to January 2014.
When asked what factors are driving the market this year, Kalama Kim, REALTOR® and Principal Broker at Coldwell Banker Pacific Properties, talks about low inventory.
“Even though pending and closed unit sales dropped during the month of January, the low levels of inventory has kept prices moving upward,” Kim says. “Many buyers have offered and lost out on properties to purchase because of the level of competition caused by low inventory. That experience may motivate buyers to make higher, stronger offers on other properties.”
Of course, with fewer homes on the market, the demand from buyers has been very strong.
“Lack of new construction has been a challenge for the last decade and has not kept up with the population growth,” Kim adds. “This leads to fewer options for buyers and less inventory overall.”
Looking forward to other factors that may influence housing on Oahu in 2015?
“The lending industry, including the mortgage interest rate and underwriting flexibility,” says Kim. “If mortgage interest rates stay low and lenders are more lenient in lending money, it is likely it will have a significant positive affect on the housing market.”
The number of closed sales were down in January as compared to January stats from a year ago. Single-family home closed sales were down 14.6%, from 246 in January 2014 to 210 last month.
Condo sales volume was also down 7.7%, from 310 during the first month of 2014 to 286 last month.
Pending sales in both categories were down as well. The low inventory of available homes, as has been the case for the past twelve months, will continue to influence the number of closed sales. In some cases, inventories are extremely low — Mililani, Wahiawa, and Kalihi are particularly depleted, according to Kim.
Yet, it may indeed be the lack of inventory, attributing to the lower number of sales, which are pushing prices upward.
The median price paid for a single-family home in January 2015 increased 7.2% — from $629,500 a year ago to $675,000 last month.
Condo sales also saw a dramatic increase — up 19.2% — from $320,000 in January 2014 to $381,500 last month. This marks an all-time high MSP for condominiums on Oahu. The previous record in this segment was $361,250, set in December 2014 (a month earlier). The affordability of condominiums on Oahu, compared to single-family homes, may be fueling this segment’s median sale price surge.
This month’s hottest markets include neighborhood’s where sellers received 100% (or more) of their original asking price.
Single-family markets that remain hot:
Ala Moana-Kakaako: 119.6%
North Shore: 100%
Hot condo markets:
Ewa Plain: 102.5%
North Shore: 100%
The number of single-family home closed sales in one month tied a 2-year high in Pearl City-Aiea — with 26 homes closed. And in Waipahu, single-family homes and condos set an all-time high Median Sale Price of $615,000 and $330,000 respectively.