Home resales in desirable neighborhoods such as Mariner’s Ridge are expected to continue growing, raising upward pressure on prices.
Posted on: Sunday, January 28, 2001
Experts predict growth in home sales
The year ahead should be generally healthy for Hawai‘i’s residential and commercial real estate markets.
On the home front, where the number of resales has been on an upswing for about three years, sales will continue to increase, but at a slower pace, according to Herb Conley, co-managing partner at Coldwell Banker Pacific Properties.
Conley predicts a 7 to 10 percent expansion in sales volume, somewhat off from the 10 to 23 percent annual growth over the past three years.
But prices, which have been increasing in selected neighborhoods, now will head higher across the board, he said, becoming the driver of growth in the total dollar volume of home sales.
"Right now we’re in the greatest part of an up cycle," Conley said.
Conley said the condominium market, which typically trails
single-family home sales, will likely also perform better this year. He predicts the record $3 million paid for a condo last year will be broken.
Although home builders are busy trying to supply new homes, inventory is expected to remain near the lowest level in a decade, which should keep up pressure on prices.
John Connelley, chairman of the Honolulu Board of Realtors, said low interest rates and low inventory keep him optimistic, although a slowing Mainland economy could have an impact.
Given that home sale cycles tend to last four or five years, however, and the Hawai‘i market has enjoyed 3 1/2 years of growth, "we would hope that that would continue," Connelley said.
Leroy Laney, a Hawai‘i Pacific University economics professor, said in a recent economic forecast that he believes Mainland demand for Hawai‘i real estate won’t be as high this year as it was in 2000.
"We know it comes in waves, and I don’t think we should expect to see it continue at the same pace," he said.
Investment from the Mainland, if it weakens, could also affect the commercial property side of the industry, although brokers said they generally expect a better year than last.
Andrew Friedlander, chief executive of Honolulu commercial firm Colliers Monroe Friedlander, said he expects outside investors to continue buying Hawai‘i property, much of it from debt-ridden Japanese owners who will continue to sell.
"More of the Japanese problems are going to be surfacing, and they have to dispose of these assets," he said.
Overall, Friedlander said he expects a greater number of commercial property sales this year compared with last, partly because of the continuing pressure on owners in Japan to divest.
Friedlander said he doesn’t expect much new development of commercial property this year. But new businesses in high technology as well as overall job creation will help boost demand for existing space, which could drive up lease rents.
Joe Haas, senior vice president for office properties at CB Richard Ellis Hawai‘i Inc., said the office market is already strengthening, with falling vacancies and rising rental rates.
He said the downtown Honolulu vacancy rate fell last year to 12.1 percent, and should reach 9.4 percent by the end of 2001. Rents should rise from $2.21 to $2.40 a square foot this year, Haas said.
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