The Ewa Area has long been a particular point of interest for me as we muddle our way through this current housing down turn. Ewa I believe provides us with a litmus test of perhaps what is in store for the rest of the market on Oahu as the current conditions and trends in Ewa are now spreading to Makakilo and Mililani.
The Ewa Region is Tax Map key 191 to 191 and this includes Kapolei. This whole area has one of the highest sales rates on the Island. The reason for this is two fold. First off, this area provides us with what is termed “affordable housing” and secondly this area is abundant in what is known as “Distressed Properties” which are predominantly Short Sales and Foreclosures.
We all know what Foreclosures are and Short Sales are the preferred choice of action when the owners can no longer afford to make their mortgage payments. The owner wants to sell but currently owes more than the home sale will provide by selling. This results is the owner having a ‘short fall’ to payoff their mortgage.
Owners will have to contact their lender(s) and prove by documentation that they can no longer afford to pay the mortgage and the owners are really asking the lender to allow them to sell the home for less than their current mortgage pay off is. This is basically a renegotiation of the mortgage. Once the lender agrees to a Short Sale the owner then contacts a real estate agent and signs the listing agreement and the agent begins marketing the property as a Short Sale where they will list the ‘conditions’ for submission of all offers which, inturn, will be sent to the lender for approval.
Let us now begin to look at the numbers in this region to reach a full understanding of this market and the impact upon other neighborhoods on Oahu.
The above map shows a % for both SFH’s and Condos for each of the areas. This % equals the amount of Just Accepted Offers in Escrow as compared to total inventory for sale. Please note the ACS % at the top right of the map is for an Average of all of Oahu SFH’s and Condos. The Oahu ACS% is the basis for the up or down arrows for each neighborhood on the Island Map, depicting above or below the Oahu Average.
At each of the neighborhoods you see will the ACS% for SFH’s and Condos in RED if this neighborhood is underperforming and GREEN if above the Islands Average. The RED Arrows are for SFH’s and the GREEN Arrows are for Condos. Each of the Arrows is either in the Up or Down positions to denote if they are above or below the Oahu Average ACS% as well.
You will also see the Average For Sale Price for SFH’s in GREEN and Average Sold Price in RED. The Condo’s Average For Sale Price is in PINK and the Average Sold Price is in BLUE.
A.C.S. stands for “Active Continue to Show.” Honolulu Board of Realtors rules require agents to assign this category within 4 days of executing an agreed upon offer between buyer and seller. This allows us to see ‘fresh’ data vs. ‘Sold’ data which in today’s market is approximately 60 days old.
The A.C.S. % is derived by dividing the total amount of “Active” (For Sale) Inventory by the number in escrow categorized as Active Continue to Show. Consequently this % is not only affected by demand or the number in the A.C.S. category, but this % is also affected by the amount of inventory for sale.
A low inventory of For Sale homes will usually have an upward affect upon for sale pricing as low inventory is a highly competitive market when demand is high which is what we are experiencing now on Oahu.
A low inventory for sale, coupled with high demand will usually affect the D.O.M. or Days On Market with a downward pressure. In some cases this same scenario will have an upward pressure upon the Average or Median For Sale prices as this is the best time for Sellers to sell their more expensive homes.
The Median Sold Price for Ewa has dropped in the past 12 months by -12% and -18% since January ’07. How much further the Median Sold will drop is debatable but I believe with the number of Distressed Properties that sell in this region will continue to exert a down ward pressure upon Sold prices. After all, can you imagine trying to sell your home for $450,000 in Ewa right next door to your identical neighbor’s home who is selling theirs as a Short Sale for $400,000? The only ‘winners’ in this scenario are the buyers.
Note: Short Sale Avg. Sold Price has lost less value and is higher than the Avg. Sold Price of Non Distressed properties.
Sales in Short Sales are increasing and are 40% of all Ewa Region sales.
As well as Distressed properties are doing in terms of numbers sold it is interesting to note the D.O.M. of Non Distressed properties is going lower while the D.O.M. of Distressed properties is rising. We must also remember that the D.O.M. for Non Distressed properties actually is calculated with Distressed Properties and this number would be even lower without the rise in Distressed property D.O.M.
The majority of neighborhoods around the Island are experiencing a loss in new listings and overall inventory. New listings in Ewa are now rising due to demand and reaction from the dramatic drop in inventory. This is opportunity for Sellers.
Throughout Oahu this year the amount of new inventory coming onto the market for sale has continued to fall. This is a common trend not only on Oahu and Hawaii but prevalent on the Mainland Real Estate markets as well. I believe the underlying premise for this occurrence is that the majority of would be sellers believe that the Economy and the Housing markets are going to improve in the near term. I do not necessarily agree that this will be case. For more on my belief please visit my website at http://www.hawaiirealestatestatistics.com/ and read my feature article under “Current Trends.”
We have had a strong year overall on Oahu in large part due to much improved numbers over last year’s very poor performance. In short, anything this year in ’09 was better than it was in ’08. Another contributing factor has been a successful Government sponsored First Time Buyers Home Purchase Tax Credit which is currently being debated in Congress as to whether or not they will extend the expiration of November 30th ’09 or extend it with or without changes to the dollar amount of the credit or possibly include buyers of second homes.
The National Association of Realtors (N.A.R.) is pre-releasing some data for their November 13th breaking report titled “Profile of Home Buyers and Sellers” and is claiming that approximately 45% of all current sales are being attributed to the tax credit. As your Realtor, I can assure you that sales to date would have not been as good as they were if we had not had this tax credit in place. The tax credit’s future is currently being debated in Congress and more information on this important housing sales incentive can be found on my website: http://www.hawaiirealestatestatistics.com/ under “Real Estate News.”
Both are declining as buyers are seeking lower and lower prices.
Due to the belief by many that the Economy is improving and would be sellers are holding off to sell their homes when prices will eventually rise again, coupled with the high current demand, especially by First Time Home Buyers, the result has left almost all neighborhoods on Oahu with extremely low inventory for sale.
There has been no similar drop in the For Sale Prices for Short Sales.
Let’s look at the differences in what are For Sale and In Escrow by price ranges.
We can see that predominantly the $400,000 to $499,999 price range is what buyers prefer at this time by looking at the %’s for sale vs. the %’s in escrow.
In Ewa we can see that buyers are not currently choosing to purchase in the lowest price ranges and this is true of Oahu as well currently, but this was not always the case.
While the market pressures of Distressed properties are lowering prices overall and coupled with the extension and expansion of the First Time Home buyer’s credit we are now experiencing a much healthier market than we had in 2008.
If we look back to earlier this year and compare the Short Sales, Foreclosures, etc. with what is happening now we can see which areas of the Island have been most impacted by these distressed properties and we begin to see where we are in this market.
We can see the two biggest areas of sales are Ewa and Leeward.
Remember, on all Sold data we are looking at what happened about 60 days ago.
Waipahu, Kaneohe, Aliamanu and Metro have grown since September.
Going into escrow with Just Accepted offers for this month we see the biggest neighborhoods in this category are Ewa, Leeward (Maili, Waianae),Waipahu Area (Waikele) and Diamond Head.
In summary, I believe that during this market down turn we are now realizing lower S.F.H. prices and especially in the Ewa Area. This situation which is compounded by the amount of Short Sales and Distressed properties is likewise contributing to the down ward slide on almost all home prices.
Because this is happening predominantly in the Ewa Area it was bound to affect other neighborhoods as well. We can now see that what has happened in the Ewa Area has also spread to Makakilo although the affects have not been as severe as Ewa. You have to remember, much of Makakilo was built prior to Ewa.
Other areas that are now starting to be affected by what is transpiring in Ewa are Mililani Area, Waipahu Area and of course the Condos in Metro.
I do not think that these aforementioned areas out side of Ewa will as affected in the same severity as Ewa but they will be affected in varying degrees. How far and to what extent these conditions will spread to the rest of the Island is undeterminable at this time. Even Kailua and Hawaii Kai S.F.H.’s are now increasing in Short Sale numbers when a year ago they did not even exist.
After all this information for Single Family Homes there has been no mention of Condos?
Do not miss January’s 2010 recap of Sales for Oahu for the entire year of 2009 which will be posted my websites!
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