While January is typically a month when activity slows, the Oahu housing market burst out of 2015 full steam ahead with prices and sales volume unseasonably high.
And while the number of active listings is up slightly in both single-family homes and condominiums for January, inventory remains severely depleted.
“Demand continues at a high level as evidenced by multiple offers on our listed homes for sale, closed unit sale results and increased prices,” says Mike James, President of Coldwell Banker Pacific Properties. “The market is driven by buyer demand locally and abroad because of low mortgage interest rates, consumer confidence, inventory lagging behind supply and a stable economic outlook. If those factors continue and no other wrench is thrown into the mix, we may see the momentum continue.”
Pent up Demand Creates Pressure for Price Push
Kalama Kim, Principal Broker at Coldwell Banker Pacific Properties, says there are only a few homes being built throughout the island as new construction projects, especially single-family homes, from the last decade are close to selling out.
“There is a gigantic need for home building on Oahu,” says Kim. “While there are new buildings coming up in Kaka’ako, they only satisfy one segment of the demand.”
The Building Industry Association of Hawaii, which for 60 years has held its annual Parade of Homes showcasing new home construction on the island, had no entries submitted in 2013 — making that the first year the event was cancelled. The event was called off again in 2015 because of the limited amount of homes available for entry.
BIA Hawaii CEO Gladys Quinto Marrone told Pacific Business News at the time, “On a grand scale, it just really shows you that we’re not producing enough homes for the Parade of Homes or for people to buy, which is why (real estate) is so expensive.”
A look at the number of closed sales in January — or sales volume — shows buyers are out in force, perhaps to take advantage of a “typically slower” market season and less competition among buyers.
As the numbers stand, sales volume was up 10.5% in January, with 232 closed sales last month, compared to the number of sales in January 2015. In the condominium segment of the market, 338 units sold and closed — a whopping 18.2% increase over the 286 units closed during the same period in 2015.
The median price of a single-family home in January was $733,500, up 8.7% from the same time last year — and marking an all-time monthly high. Previously, the highest MSP of a single-family home on the island was $730,000, in September 2015 — a peak summer month. And prior to that, the highest monthly MSP was $719,500, from November 2014.
Oahu’s luxury market — single-family homes priced at $1 million and higher — is no doubt making a significant impact on the overall SF MSP, as evident in the stats from the last couple of years. The total number of sales in the luxury segment in 2014 — 660 closings — was a record, the previous record of 655 set in 2006. Compare that to the number of luxury sales in 2015 — 751 closings — an impressive record smashing the total from the year before. Overall, the single-family segment (all prices) reported 3,455 closings in 2015 — of which luxury sales comprised more than 20% of the market.
The January median sales price of a condo on Oahu was $374,500, down 1.8% from $381,500 in January 2015.
Worth noting: Pending sales in both single-family and condominium categories are up in January — up 12.5% and 17.5% respectively — indicating that closed sales will likely remain strong in the coming months.
Neighborhood statistics for 2015 recently published by the Honolulu Board of REALTORS®, include a list of the Oahu neighborhoods where sellers consistently received 99% or more of their original asking price throughout the year. For homeowners in these areas considering selling, 2016 looks to be great timing.
Ewa Plain: 99.2%
Pearl City-Aiea: 99%
Aina Haina-Kuliouou: 100.1%
Ewa Plain: 99.3%