MEDIAN PRICE ON HAWAII HOMES DECLINES
Oahu home prices fall 10% in September
By Andrew Gomes
Advertiser Staff Writer
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O'ahu home prices took their biggest hit of the year last month to upset what previously had been a mild downturn, as frightened consumers and battered credit markets appeared to shatter stability in Hawai'i's largest housing market.
Median sale prices of previously owned single-family homes and condominiums each dropped about 10 percent in September, according to the latest data from the Honolulu Board of Realtors.
The median single-family home price fell 9.2 percent to $590,000 last month from $650,000 a year earlier. The median price has not been below $590,000 since April 2005.
The median condo price fell 11.6 percent to $296,000 last month from $335,000 a year earlier. The last time the condo median price was below $300,000 was April 2006.
Harvey Shapiro, Honolulu Board of Realtors research economist, said destabilized global financial markets that have rocked consumer confidence and restricted credit for home loans and other lending have begun to hurt local home sales.
"It appears that the O'ahu housing market is reacting to the economic crisis that has been affecting financial markets worldwide," he said. "I think it's scaring people into doing things they hadn't planned on doing."
Some observers expect that home sale prices will see similar or worse weakness in the coming months given the continued uncertainty in financial markets.
The gloomy outlook also stems from the fact that September sale statistics reflect deals typically made one to three months before. So a purchase agreed to this month in the midst of the planned federal financial industry bailout probably won't close and show up in the sale data until sometime from November to January.
Ron Lee, an agent with Honolulu-based brokerage firm Real Estate Inc., said all the bad economic news is leading buyers, including investors, to really lowball sellers.
"They think they can get a really good deal," he said, adding that offers $100,000 below an asking price are not uncommon nowadays. "It's a challenging market."
Lee said that at the extreme he's seen some homes sell for 20 percent less than earlier comparable sales. One Waipahu house he has in escrow for a seller is contracted to sell at a price that he said is 5 percent below the sale price of a smaller house next door.
"The sellers understand what's happening in the marketplace," he said.
8.8% DROP IN JUNE
Single-family home prices up until last month mostly had been down about 3 percent, as reduced demand led to dramatically fewer sales and mild price softness.
There was one month — June — when the median dropped 8.8 percent to $625,000 from a year earlier, but that was due in large part to the median price having set a record of $685,000 in June 2007.
Last month, there were 215 single-family home sales, down 15.7 percent from 255 a year earlier. The decrease was on the light side compared with drops near 30 percent in recent months. Inventory and the median number of days property took to sell were little changed from prior months.
Condo prices suffered an even more surprising drop last month, because this year up until September the median sale price had been up slightly in six of eight months, despite dramatically fewer sales.
However, it appears that the median condo price decline last month was influenced by significantly fewer sales in neighborhoods with luxury condos such as Kaka'ako and Hawai'i Kai. Sales in those two areas were down 40 percent to 50 percent.
Still, broader price weakness was evident in the market, with:
The number of condo sales was down 26.3 percent to 305 last month from 414 a year earlier, a decline that was in line with recent months. Inventory and the median number of days property took to sell were little changed from prior months.
RISE IN FORECLOSURES
Besides financial market gyrations, weakness in the local economy, including a string of layoffs by major Hawai'i companies in recent months, has added to the pressure on the local housing market as some people who lose their jobs struggle to hang on to their homes.
The number of home foreclosures hasn't been alarming in Hawai'i, but they have been consistently rising for about two years and are clearly affecting property values.
One home seller on O'ahu, who didn't want to identify himself or his property so as not to harm sale prospects, said foreclosure sales in his townhouse complex are damaging his ability to attract decent offers since he listed the property about six months ago.
"It's driving everything down," he said. "It is dead."
According to property records, one bank-owned unit in the same complex sold recently for about $100,000 less than what it sold for nearly three years ago.
Despite all the economic woes and weakened median prices, the market isn't all that bad, according to many brokers.
"I still think Hawai'i has the strongest prices (among many U.S. markets)," said Lauren Ige, an agent with 'Aiea-based firm Realty Group. "People are still buying. People are still selling. People still have needs."
Mike Gallagher, broker-in-charge at RE/MAX Honolulu, predicted that median prices for the full year will settle at $620,000 for single-family homes and $320,000 for condos, respective changes of minus 3.7 percent and minus 1.5 percent.
The University of Hawai'i Economic Research Organization last month forecast a 3.6 percent decline in the median home price this year, and a 1 percent rise in the condo median price.
For the first nine months of the year, the single-family home median price is down 3.5 percent to $625,000, and the condo median price is unchanged at $325,000.
Reach Andrew Gomes at agomes@honoluluadvertiser.com.
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