Maui Real Estate

Jul: 13

Real Estate Woes Coming to an End?

Market trends are starting to suggest that the end of poor real estate woes may be here or at the very least the worst is over. In Oahu, home sales shoed a marked improvement in June increasing 9.5% compared to a year ago. These latest statistics from the Honolulu Board of Realtors are certainly providing some hope that sales will continue to increase.

This June saw 254 sales whereas a year ago that figure was only 232. While the median home price has dropped, approximately 9 per cent to $569,000 from June 2008 there has been a slight rise from the median home price in June. These figures are promising for detached house sales but condo sales are still lagging. In fact, condo sales fell 17.3 per cent from June 2008 despite the fact that the median condo price is also down more than 5 per cent from last year. Month to month comparisons of condo and home sales as well as their median prices suggest slight improvement from May but it is still too early to tell if the trends will continue.

Real estate experts are cautious to be overly optimistic but are hoping that these improvements are a sign of good things to come. Others argue that what we’re seeing is a seasonal effect rather than an improving real estate market. Many people tend to buy and sell during the summer months so most realtors expect to be busier this time of year. Still, homes were also selling faster in June of 2009. The number of days on the market for condos and homes in June was 45, which is the lowest this figure has reached in over a year. Compared to January when most homes remained on the market for more than 70 days, there has been noticeable progress.

Sellers are still reticent to put their homes on the market which shouldn’t come as a surprise. With housing prices down considerably over the last year many sellers are waiting for a return to profitable times. This June there was approximately 1,700 single-family homes for sale which is considerably lower than the 2,080 homes available last June. Likewise, the inventory of condos is considerably lower than in June 2008. In fact, the number of available condos dropped 11.4 per cent from 2,687 last year to 2,381. Clearly, sellers are taking a “wait and see” approach and are not keen to sell when they have other options.

Home buyers, on the other hand, might be encouraged by the historically low interest rates. Mortgage rates are around 5 per cent, or lower, for 15 or 30 year fixed term mortgages. This combination of lower rates and lower prices may be at least partially responsible for more sales. Whether the market has bottomed out is yet to be determined but optimistic realtors feel as though the worst is over.

Overall total sales in 2009 have been much lower than in the first six months of 2008. In fact, 21.7 per cent fewer homes have been sold throughout Honolulu this year than last and condo sales are still suffering. Indeed, total sales volume has also dropped significantly from $1.97 billion last year to $1.23 billion this year which represents a 37.8 per cent fall.

Sellers in the metro, East Oahu, and Diamond Head areas were able to receive higher than median prices in June while those on the Leeward Coast were bringing in some of the lowest prices. In fact, more evidence of the difficult times faced by real estate agents is seen in the fact that board membership in Oahu is also down, by 10 per cent. Across the state, this figure is an even more staggering 21 per cent drop. It seems as though part-time agents have given up on the industry while full-time professionals are hanging tough. Real estate offices are closing at unprecedented rates despite improving sales volume over the last quarter. The real story has yet to unfold and determining whether this is a seasonal spike or not will come down to sales figures throughout the fall and winter.

With foreclosures driving housing prices down and mortgage rates being the best in years it is still possible for the market to continue on an upward trend. Agents throughout Honolulu are seeing more balance and may be coming out of the red. Cautious optimism seems to be the popular approach but some experts are predicting the bottom toward the middle of 2011.