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Time to check in to see where Hawaii home prices are from my earlier predictions. According to Hawaii Realtors data, Oahu single family homes have declined 26% from their peak in Feb 2022, to Feb 2023. That is correction territory, and if that momentum continues through this year, it is possible that local market will experience a technical crash. Maui has seen a fall in SFH prices of 14% from June's peak, so less than a year. Kauai peaked in Nov, 2022 and is down 36%. There might be some noise in there as those numbers and dates seem like outliers. Big Island is down 11% from a peak in March, 2022. We're seeing similar trends in other over-bought cities across the US, especially where unaffordability ranks high.
Or, time for a reality check - hardly anybody is selling/buying. Nothing is corrected.
This is what someone posted on another forum I frequent:
Oahu housing market update
Since I know some of you might be curious or confused about what is going on with our housing market here in Oahu, I thought it would be helpful to share some hard statistics with you to help get a better understanding of where we are compared to last year.
So here we go,
O‘ahu’s housing market remained sluggish in February, with closed sales of single-family homes and condos down 28.2% and 33.1%, respectively. However, most likely due to the dip in mortgage rates, single-family home sales rose 15.3%, and condo sales increased by 18.2% compared to January 2023.
Even though it may not be felt, median sales prices in both markets did actually decline, dipping 12.3% for single-family homes from $1,125,000 to $987,000 compared to 2022. The condo market experienced a modest 3.4% decline from $497,000 to $480,000. A small sigh of relief for affordability though I don’t know if that will be felt with these normalizing interest rates. The price of borrowing at todays rate is considerably higher. Prices still have a ways to go for that to come to fruition. We all have to remember that those 3% fixed rates we were getting were HISTORICALLY LOW. Don’t expect those rates to come back anytime soon.
In February 2023, single-family homes nearly quadrupled the median days on market, skyrocketing to 47 days compared to 13 days in February 2022. The median days on market for condos doubled to 28 days compared to 14 days a year ago.
The share of single-family homes sold above the original asking price fell dramatically from a year ago, accounting for just 19% of sales this February, compared to 55% in February 2022. From another perspective, only 32% of single-family home sales received full asking price or more compared to 73% last February. In the condo market, the share of sales closing above the original list price shrank only 15% this February compared to 37% in February 2022. Of the sales this month, 36% received full asking price or more compared to 56% of sales last year.
Though there were 233 new single-family home listings and 463 new condo listings this past month, this was well below the number of listings brought to market in February 2022, down 36.5% for single-family homes and 37.3% for condos.
And just in case you were wondering.
The 30 year fixed rate as of 3/20/23:
5.875@ 2.00 points
6.500% @ zero points
Lots going on in our economy.
It’s going to be an interesting year ahead of us. Blessings to you all and be safe.
Time to check in to see where Hawaii home prices are from my earlier predictions. According to Hawaii Realtors data, Oahu single family homes have declined 26% from their peak in Feb 2022, to Feb 2023. That is correction territory, and if that momentum continues through this year, it is possible that local market will experience a technical crash. Maui has seen a fall in SFH prices of 14% from June's peak, so less than a year. Kauai peaked in Nov, 2022 and is down 36%. There might be some noise in there as those numbers and dates seem like outliers. Big Island is down 11% from a peak in March, 2022. We're seeing similar trends in other over-bought cities across the US, especially where unaffordability ranks high.
The very low level of inventory is the only upward price pressure, but it is clearly losing ground to the huge spike in the cost to borrow. A stand off between sellers and buyers will likely continue over the coming months. Despite banking woes, the Fed has not indicated a cessation of tightening, only a review of it. So, no relief for borrowers any time soon, which will continue to feed into downward price pressure. At some point, we could see seller capitulation as equity erodes further. That will lead to a panic and possibly a crash. On the other hand, worsening banking woes could freeze credit, forcing the Fed to stop its tightening. That might offer some short-term relief, but it would likely result in a recession and price declines would resume.
Whichever way you look at it, things look ugly now and could get worse. On the bright side, a good shake out will restore some form of equilibrium and mean reversion. Ultimately, that will be beneficial.
Actually median prices fell 12.3% YoY. Not 26% as you stated.
There has been a very steep drop off of SFH listings in the urban core and east Honolulu. Whereas the inventory has been stable in central, north and west Oahu. There are only 95 active homes for sale within a 5 mile radius (10 mile diameter) of Diamond Head (from Punchbowl to Niu Valley). Median listing price for these homes is 3.1M. Less than 100 homes for sale over a 10 mile stretch. That's insane.
And Hawaii Kai which is a very large upper middle class/wealthy community with virtually all SFHs has a mere 17 active listings with a listing median price of $2.3M.
What does this tell you? It tells you more lower priced homes are transacting because there are more that are available for sale. And what does that do to the median price?
While median prices are the defacto area value indicator, they don't always paint an accurate picture of home values. But prices are definitely down from the peak, nobody is arguing this. I just don't agree the sky is falling and will continue til it hits the ground.
While median prices are the defacto area value indicator, they don't always paint an accurate picture of home values. But prices are definitely down from the peak, nobody is arguing this. I just don't agree the sky is falling and will continue til it hits the ground.
The sky is certainly not falling - and won't unless the State goes into a serious recession and unemployment ticks way up - and starts to drive foreclosures because people are not making payments. That is the Hawaii playbook which was seen after 9/11 and the Great Recession.
The only people selling right now are people who have to do so (military, move to mainland, etc) or cash buyers for the next home. People sitting on 3.5% or lower mortgages are not selling.
"...The median price of a single-family home topped $1 million in most areas of Hawaii during the coronavirus pandemic and has declined only modestly since. The state has the fourth-highest per capita rate of homelessness in the nation after California, Vermont and Oregon. On Thursday, new data showed the islands experienced net population loss five of the last six years. In 2022, U.S. census data showed more Native Hawaiians live outside Hawaii than within.
Now, amid growing urgency, both the governor and Hawaii’s legislative leaders are making housing a top priority..."
Oahu condominium prices climbed to a record $536,000 in March, and single-family homes regained the $1 million threshold, as resales in the local real estate market showed signs of picking up for the spring buying season.
… - apparently the sky is not actually falling...
No. Just mortgage rates … *yawn*
Housing market data suggests sector's downturn 'coming to an end'
Housing market data in recent weeks has offered some signs of stabilization as the spring selling season begins to ramp up.
Mortgage rates are on the downswing, with the average 30-year fixed mortgage dipping to 6.28% from 6.32% the week prior, according to Freddie Mac. This marked the fourth straight weekly drop as the bank crisis that began four weeks ago has pressured Treasury rates.
The slide in rates also comes as the Federal Reserve raised interest rates by a quarter point in March as it continues its aggressive campaign to cool rapid inflation.
Mortgage rates at 6.28% is not exactly a motivating factor for homebuyers
6.28% is only high relative to the past, post great-recession, decade. It’s right in line with most of 2000 - 2007/8. And lower by a couple points than the 30 years prior. The sky is not falling.
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