New Homeowners Can Build Equity from Year One
If you bought real estate on Oahu in 2015, you might be surprised to hear your property has likely appreciated already — significantly in some cases. Indeed, in February, the median sales price of a single-family home is up 8% from February 2015, and condo prices are up 16.1% during the same time period.
It is this upside to the local housing market that attracts new buyers when they can realize equity gains so quickly after closing.
“Hawaii real estate is unique in that we are on an island and only 8% of our island is used for residential real estate,” says Kalama Kim, principal broker at Coldwell Banker Pacific Properties. “This lack of buildable land causes for low supply forcing prices up as demand for homes rise.”
With supply and demand driving local housing prices, we are always keeping an eye on inventory levels, which remain low. Data reflecting months of remaining inventory (MRI) — a stat that measures how long the active listings will last at the current rate of sales — reveals inventory levels are low in both the single-family and condo segments. Single-family MRI is at 2.7 months and condos MRI is at 2.9 months — well below a balance market historically characterized by 6 months of supply figures indicating a healthy market for both buyers and sellers. Less than 6 months indicates there is not enough inventory to meet demand.
Island housing stats show a 19.4% bump in the number sales that closed in February, compared to February 2015 figures — 240 single-family homes sold in February, compared to 201 a year ago. The number of condos that closed in February was up 11.7%, from 290 in February a year ago to 324 last month.
The median price of a single-family home in February was $700,000, jumping up 8.0% from the same time last year. Only two months into 2016, the year-to-date MSP of a single-family home is already up 7.5% over 2015, from $665,000 for the first two months in 2015 to $715,000 by March 1.
The MSP of a condo on Oahu was $378,444, up 16.1% from the $326,000 mark hit last February. In 2015, year-to-date MSP after the first two months was $350,000, and this year’s two-month MSP is at $375,000 — on track for a record year.
“Listings are still generating multiple offers in the price points where the demand is highest — including the $400,000 to $800,000 (single-family homes) and $200,000 to $500,000 (condo/townhomes),” says Kim.
“Buyers should keep in contact with their real estate agent and loan officer to react quickly when they find the right home to purchase and to lock in to the right interest rate as we expect interest rates to rise,” he says. “To make your purchase offer more appealing, it is important to strengthen an offer when competing with other offers. This may include shorter time periods for inspections or clauses whereby the buyer will be making up any appraisal-value shortfall.”
With the first day of spring just around the corner, and the beginning of the summer selling season, this month’s hot markets are those neighborhoods where sellers received 100% or more of their original asking price. If you’re thinking of selling your home anytime soon, this would be a good time to list, before interest rates begin to rise.
Aina Haina-Kuliouou: 100%
Makaha –Nanakuli: 100%
North Shore: 102.8%
Ala Moana – Kakaako: 103.3%
Hawaii Kai: 100.6%
Kailua – Waimanalo: 103%
Kalihi – Palama: 100.2%
Kapahulu-Diamond Head: 100%
Waialae – Kahala: 101.5%