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Oahu Real Estate End of Year '08 Report

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It was an exciting year for us all involved in the real estate market in Hawaii. It wasn’t just Oahu that suffered but all the Neighbor Islands as well with Kauai, Maui and the Big Island all responding to the newest buyer’s market and current financial conditions for everyone in the World.

Since I do most of my work on Oahu, it is only this Island that I have the most information on current market conditions. I will include some data for Kauai and in the next couple of months I will have some data for the Big Island to share with you.

Let me recap some of these numbers for us from the above page from the Honolulu Board of Realtors Dec. ’08 report:

Oahu SFH 2008

1)Volume Sales: -24.4%
2)Median Sold Price: -3% ($624,000 Dec. 31st.’08)

Oahu Condo 2008

1)Volume Sales: -28.5%
2)Median Sold Price: 0% Change ($325,000 Dec. 31st.’08)

Please remember we are dealing with Median numbers and not Averages when looking at Median Sold Prices. It is equally important to be aware of inventory by price range when looking at For Sale Inventory and Sold Inventory or Inventory in Escrow. Being cognizant of this will go a long way towards your understanding of what is truly happening in the real estate market and your ability to understanding the numbers in this report or the Honolulu Board of Realtors (H.B.R.) Year End / December report.

As we can see from the above Oahu Map the bright spots are only Condos in Ewa Beach, Kaneohe and Mililani Town that have increased in either Average or Median Sold Prices. Makakilo SFH’s matched the general decline for Oahu.

Please note: RED = Condos BLUE = SFH’s

After looking at the above graph you have to wonder where the bottom will be. Will it be as low as the sales volume in 1995 after the effects of what is termed as the “Japanese Bubble?”

I believe the Condos will lead the way again in the current downturn as they did in the last downturn. From the top of the last market cycle to the bottom in 1995 the condo sales volume dropped approximately -73%. Since we are currently at a -28.5% drop so far, I am assuming that we still have a long way to go in dropping sales volume for condos. You have probably also noted that the Median Sold Price for ’07 vs. ’08 for condos did not change at all. I find this amazing and I truly have no explanation for this, yet.

I find it equally amazing the number of realtors who believe and also chant the mantra “We are not the Mainland”, when it comes to explaining why the Median Sold Prices for both Condos and SFH’s have not dropped significantly. I believe it naïve or at the very least irresponsible to believe that we are going to escape the trends on the Mainland. Yes, we are different in some ways that make Hawaii Real Estate unique from the Mainland and many parts of the World, but I also think that we are simply lagging behind an unavoidable trend that is coming our way.

Now that we have reached the critical, main point in this article I would like to explain why I think this way and what I believe will be coming our way as we proceed throughout 2009 in real estate sales for Hawaii.

Unlike the “Japanese Bubble” we are in the beginning stages of a World Wide economic down turn. I must stress that we are in the beginning stages. In my opinion the economic conditions we are generally experiencing are in the beginning stages and much is yet to come before we see our way through our current economic malice.

It is my opinion that the Hawaii economy will worsen at a much faster rate than what we have seen so far which will carry forward into 2010. This time the real estate market is not being effected by a “Japanese Bubble” but a World Wide recession and I believe this will have a more profound effect upon the Median Sold Prices for Hawaii Real Estate.

I believe that we will see at least as much loss in Median Sold Price declines, if not more than what we experienced in 2008. The reality of this statement will be judged at 2009 year end. This is only a general prediction and in all likelihood will not be true of every neighborhood or city in Hawaii. Some areas will not decline as much or some may even increase. This is why I ask everyone to consider their individual real estate situation carefully by comparing the statistics for each area, each neighborhood, each condo building, etc.

One other very important note is that when reviewing the data in this article please pay particular attention to the Pie Charts. This will show you how much the Median figures are weighted in large, high priced inventory. This high priced inventory is what effects the Median’s the most. This also means that prices in Hawaii will not fall out of the sky like the Mainland and most notably mentioned in Jan. 19th’s Honolulu Advertiser’s Front Page Article titled ‘Hawaii Home Prices expected to fall -31%.’

This is not going to happen. For Medians to lower and they will, a -31% decline in Median Sold Prices for SFH’s is possible but will take a few years to become a reality. Prices will not change that fast, period. As more and more buyers purchase in the lower or lowest price ranges and less and less buyers curtail buying the high end price ranges, the drop in Median Sold Prices will become steeper and steeper resulting in much lower Median Sold Prices until things naturally level off and we hit bottom before the rise again in home values begin.

Here is the final recap I have to offer for 2008:

Above are just examples of reports that can be reviewed at my website:

I try to cover all major sales areas on Oahu including Mililani Town and Mililani Mauka to mention but a few. I may not have all areas and if you do not see Condo specific building recap reports for ’08 of your choice or neighborhoods that you need or have questions about, then please feel free to email me at

I hope you have enjoyed this column. If you have any questions or comments I welcome them.

I wish you much Aloha,

Mike Gallagher
Broker in Charge, RE/MAX Honolulu /

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