Last year was a dismal year for those trying to sell a home on O'ahu, with the largest price and sales declines in more than a decade, but there was a silver lining for some buyers: better affordability.

Personal income, mortgage rates and median home prices last year made O'ahu single-family homes more affordable than they've been in five years since sales peaked in 2004 roughly midway through an eight-year price run-up.

Some local economists expect interest rates this year will rise from their recent lows to make homes less affordable than they were last year. If rates stay higher and home prices rebound in the next few years, 2009 may turn out to have been a pretty good year to have bought a home.

"A lot of people will look back on 2009 as a year of could've, would've, should've," said Paul Brewbaker, principal of local consulting firm TZ Economics.

Last year, it took 37 percent of O'ahu's median family income to afford a median-priced ($575,000) home, according to Brewbaker's calculations. That compared with about 48 percent in the two previous years. In 2004, the figure was 33 percent.

While last year's affordability rate was better than recent prior years, by no means was it great. The affordability figure has been between 28 percent and 30 percent in 1977, 1998, 1999, 2001, 2002 and 2003. Brewbaker's data don't go back before 1977.

Nationally, it took 15 percent of the median income to buy a median-priced ($173,200) home last year, down from 18.5 percent in 2008 and 21.6 percent in 2007, according to the National Association of Realtors.

The affordability gap is one reason O'ahu has one of the nation's highest rates of condominium ownership, and one of the lowest rates of homeownership at about 58 percent.

This year, Brewbaker predicts the affordability level will jump to 41 percent of the median income if interest rates rise to 6 percent from last year's 5 percent average. The economist also predicts that the figure will stay above 37 percent for at least the next few years.

Besides the interest rate projection, Brewbaker expects affordability will also be undercut by a 1 percent increase in O'ahu's median single-family home price to $580,000 this year.

"It's not going to get egregiously inaffordable, but it's not going to get as affordable as it did in the late '90s or early 2000s," he said.

Carl Bonham, executive director of the University of Hawai'i Economic Research Organization, also expects O'ahu home affordability will weaken this year with mortgage rates rising at least a half-percentage point and personal income staying flat.

It's hard to say to what degree changes in affordability have on the volume of home sales. The number of O'ahu single-family home sales last year totaled 2,585 — the lowest since 1998. The recent high was 4,702 sales in 2004, just before affordability deteriorated from 33 percent of the median income to 42 percent in 2005.

Dennis Oshiro, executive director of the Hawai'i HomeOwnership Center, a nonprofit working to increase home ownership opportunities for low- and moderate-income families, said more restrictive mortgage lending requirements last year inhibited sales and counteracted improved affordability.

"It's tougher now, especially for first-time homebuyers," he said.

Oshiro said the organization helped 68 first-time homebuyers last year, which was below a typical annual figure over 150.

Chason Ishii, president of residential real estate brokerage firm Coldwell Banker Pacific Properties, said low consumer confidence was another factor that kept many buyers on the sidelines for much of last year.

Signs of economic stability began to emerge in the later part of the year, which Ishii believes contributed to an increase in home buying during the last several months of 2009. A federal tax credit geared to spur home sales also contributed to the shift.

Ishii believes the home affordability level of last year will be extended this year with a slight decrease in O'ahu's median home price offsetting higher interest rates.

"The affordability should still be pretty balanced, but it will be balanced in a different fashion," he said. "There's a lot of good value right now."