Friday, March 10, 2006

Rates, prices continue to rise in Honolulu

Mortgage rates have climbed to levels not seen since 2003, according to this article from the Honolulu Advertiser/AP:

The rising rates have begun to cool the sizzling housing market with sales of both new and existing homes posting bigger-than-expected declines in January.
Nothaft said the housing sector, which posted record sales levels for five straight years, was shifting to a slower pace, but he predicted the decline would not be severe enough to disrupt the overall economy like the stock market slowdown did in 2000.

"We see no signs of a bursting bubble, but rather a return to a more normal pace of activity," he said.

Some economists believe that 30-year mortgage rates could rise as high as 7 percent by the end of the year.

Check out this chart featuring real estate trends for a couple Honolulu neighborhoods (click on the image to enlarge):

Sales down on Neighbor Islands

The Advertiser brings us news that home sales are slipping on the Big Island, Maui, and Kauai in February:

"The market is off and the national trends say we'll be down 4 percent on volume this year — and Hawai'i's reflecting this trend," said James Wright, president and CEO of Century 21 All Islands. His company's sales are nevertheless running 20 percent ahead of last year, Wright said, and "even with the drop off, it's a positive market still."

Condo sales were up in Kauai, but down on Maui and the Big Island. But we're still cheaper than California:

"A lot of the higher-priced condos have been sold to Mainland investors, especially from the West Coast. Especially if you're from California, a two-bedroom condo on the ocean in Kona can go for $800,000, whereas that same condo in California would cost $1.5 million."

Friday, March 03, 2006

Oahu Real Estate Cycle is "Pau"

Each of Honolulu's dailies reports today on the changing state of real estate sales on Oahu.

From the Advertiser:

O'ahu's housing market mellowed further last month as fewer people bought homes at prices that reached a record high for condominiums but were little changed for single-family homes.


The Honolulu Board of Realtors, which released the sales data, said the number of transactions declined 7 percent. There were 248 single-family homes sold last month compared with 266 a year earlier, and 487 condo sales compared with 525 in the same period.

The broad softening of the market is particularly being influenced by a flood of properties put on the market by sellers, some of whom perceive the price peak is near and want to get top dollar.

And from the Star-Bulletin:

The last time Oahu had this much inventory was in March 2003, Riggins said. There is a 5.3-month supply of single-family homes and a 4.4-month supply of condominiums remaining for sale.

The buildup in inventory and slowdown in the market is "absolutely incredible news" for a buyer, Riggins said.

"We're in the zone," Brewbaker said, forecasting that median home prices on Oahu, Maui and Kauai will soon start to echo those in California's now cooling markets.

Three out of five of California's top markets, including Silicon Valley, San Francisco and Orange County, have gone flat, with median prices staying in the $710,000-to-$730,000 range, he said.

"I always say that Hawaii is the western edge of Orange County," Brewbaker said.

"Frankly, the market is just not that good," said John Riggins, owner of John Riggins Real Estate. "The economy is doing very well, but the market is taking a rest. The consumer needs time to rethink and adjust to the higher prices and higher interest rates."

I wondered how long it would be until MSM and realtors could no longer pretend that real estate has nowhere to go but up.