Published July 2006
Please check out the Case Study at the bottom of the page – could make you $$$
Hawaii – Oahu – Windward – Real Estate Update
Oahu Median sales price for a single family home that closed in June 2006 was $639,000. Compare to May’s $668,300 April’s $615K, March’s $650K. One year ago the median was $593,300.
We are getting close to the month that will “cross over” - where this year’s median falls below last year’s. This is the beginning of the end of the up cycle. Also realize, those sales that closed in June were largely made in April. We may see some continued fluctuations but the trend is flattening or down. That said, you CAN still ride this wave and get your equity out before we “cross over” last year’s figures. Let us help you do that! We are studying the market every day and it’s still a good time to buy, so we CAN sell your property! If interest rates rise more (about 6.75% today compared to 5.5% a year ago) and that costs a buyer a LOT. (See Case Study below) --- Could be a large part of the reason we’re flattening.
NOTE TO INVESTOR OWNERS: If you have equity in your property here and do not want to take the RISK of “let’s wait and see” the time to act is NOW. Let me explain… If you have $500,000 of equity today that you can pull from your investment property, you could be making an income from that of $35,000 per year using a 7% return. The question is… Is YOUR positive cash flow even approaching that? And how is your property’s condition? Are you in need of an expensive re-do? Another advantage to moving your equity is to buy a newer investment with fewer maintenance costs. Why take the risk of “waiting to see” in this changing market? If you want to know where you can do a 1031 Exchange into property earning 5-8% cash-on-cash returns, WE CAN HELP YOU DO THAT. To become wealthy in real estate, you must move your money (your equity) when the timing says to do so. It’s time. If the market drops 20% and in my scenario above, you lose $100,000 in equity. If you sell then, your cash-on-cash returns on the $400K remaining (using the same 7%) gives you $28K/yr. A loss of $7K/yr in income. So… why wait?
The number of single-family home sales is down 16.4% over last year. CLOSED sales of homes in June was 368. Our May sales (opened escrows) were startlingly lower too… which was also a national and local trend… you will see the results of THOSE stats show up in July and August’s statistics. ***DON’T WAIT FOR THE PUBLIC to get the news and the competition gets even stiffer! *** Compare June’s 368 to May’s 374, April’s 332 and March’s 392. One year ago that number was 440.
Condos sold in JUNE had a median price of $310K compared to May’s $306K April’s $296,400 and March’s $312K. One year ago the median was $264K. Probably a while to “cross over month” in condos.
There were 641 condos closed in JUNE compared to May’s 605, April’s 584 and March’s 696. Nowhere near the high of 831 last August. Number of condo sales a year ago – 703. Condos generally follow the housing market so there is still time to get out at peak prices!
Other News to Note: Pending Index tracked by the National Association of Realtors showed nationwide the Pending (in escrow) properties are 10.1% down from same month last year. West part of country is down 12.9% from same month last year. Interestingly, homes in Canada are UP 14.2% in Canada 2nd quarter over last year. Those Pending numbers will show up in Lower Solds in 2-3 months. Watch for that news then!
Oahu Total Inventory - In June on Oahu, 691 newly listed homes were added to the inventory compared to 688 last month, and 590 in April. Inventory is climbing. Condos new on-market were 921 compared to 987 last month and 850 condos added in April. Total single family home inventory is at 1836. Last month that number was 1722. Another signal to SELL NOW. The previous cycle’s highest number I have a record for is 1613 in May 2001, which we are WAY over. Condos were at 2582 in June compared to last month’s 2413.
Those figures compare with last year this same month of only 879 homes and 988 condos on the market, or way over double last year’s inventory. Makes things MUCH better for Buyers in this market compared with last year! Supply and Demand changing making it a GREAT time to buy or sell! Benefits on BOTH sides for a change!
Months of Remaining Inventory – Median is now at 4.9 in houses and 4.3 in condos. Last year same month we had only 2.4 in homes and 1.4 in condos. So it takes more than double the amount of time to sell, on average. For upper ranges those #’s are much higher. Over $1M in homes is 10.7 months. In condos over $500K it’s 8.8 months.
Oahu’s Days on Market (DOM) - June houses came in at 50 DOM median. For condos that is 39 compared to 38 last month and 32 the month before. A year ago it was 15 for houses and only 16 for condos.
Single Family Windward Homes Median Sold Price - Kailua/Waimanalo JUNE monthly median price is $799,500K compared to same month last year at $810K. (YES, it’s LOWER- this area already hit “cross-over”) Kaneohe is $770K compared to last June at $675. Windward Coast is $729K compared to $662,500 last year. (A reader asked last month why I lump Waimanalo with Kailua… I don’t. The Board of Realtors does it and I pull the stats from them for consistency!)
Condos/Townhomes Windward Median Sold Price – For JUNE in Kailua/Waimanalo the Year to Date median price was $422K compared to same month last year of $385K (remember, condos lag homes); Kaneohe YTD was $380K compared to last year at $312,500; Windward Coast’s YTD median is $149K versus $157,500 in the prior year-to-date.
If you want the stats for another area outside of Windward, simply ask! Email me at Donna@stott.com
Case Study: A Buyer mortgaged $1M last year about this time and obtained a 5.5% interest rate with a PI payment of about $5650/mo. If that buyer wanted that SAME payment this year, they could only afford to mortgage $876,317 at today’s 6.75%. That’s right… Assuming buyers can afford what they could last year on a monthly basis, they can’t afford the same house price that they could last year. In fact, in the example I gave above, they can only afford 87.6% of last year’s prices. That means a house worth $1M last year may only worth $876K today assuming the buyer can afford the same per month. Some experts are saying the rate could go to 7 or 7.5 by end of this year. That could mean a further decline in prices here in Hawaii due to the large average prices.
If you are thinking of selling, there is no better time than NOW. Getting your equity out of your home or investment now is your best way to insure that you keep that equity. Let us know if you want us to spend the time to analyze what your property is worth now, please let us know. Or if you want to buy, do it now while inventory is high and before the rates rise again! Just email us at Donna@stott.com and we’re happy to help with all your real estate needs!
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Donna Stott, R, CRS, e-Pro The Stott Team
Team Coordinator 254-1515 locally
DonnaStott@stott.com Toll Free: 1-800-922-6811
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