In November of ’09 I submitted an article for Oceanic Cable AroundHawaii.com briefly touching upon the sales success of Luxury Condos in this neighborhood.
This is a follow up report in more detail, as I believe this market bears more attention particularly while our current real estate sales continue to struggle its way out of this recession.
When I first began analyzing this market the predominant statistic that stood out from rest was that buyers are choosing to purchase a two bedroom configuration more than any other offerings such as Studios, 1 Bedrooms and 3 Bedrooms.
The second most important statistic was that out of all the sales taking place in the 2 Bedroom configuration, the Average Sold Price was around the $600,000 range and less.
Armed with this information it has taken me about 2 months to analyze this market in detail and this is the basis for this report.
Once you have read this report you should have a complete knowledge of this market and how it may relate to our Real Estate recovery.
The above pie chart shows us how everything For Sale is broken down by price range for the 2 Bedroom F.S. market. The most popular price range is the $600,000 to $699,999 range, however the $1,000,000 range is significant as well.
What we see going into Escrow for November is a different story.
The most popular price range buyers were choosing to put into Escrow for November was by far the $500,000 to $599,999 price range, followed by the $600,000 to $699,000 price range and the $700,000 to $799,999 price range.
These solds went into Escrow approximately 60+ days ago and we can see that the most popular price range is the $500,000 to $599,000 range.
From the graph above we can see that the majority of For Sale Condos Avg. Sold Price for all of Kakaako’s 2 Bedroom F.S. condos was much higher due the fact that the much higher listed condos in the $1,000,000+ range heavily influenced the average of all condos.
We can also see that since January ’07 the Average Sold Price has dropped -5%. Not bad, as this decrease equates to an average loss of 1.67% / year in our current Real Estate market.
Volume sales has dropped off over the last three years but one needs to take into account that in ’07 most of these condos were first built and sold, therefore the high number of sales for that year.
Although the amount of sales has dropped for each of the years the drop between ’08 and ’09 is -3%.
The D.O.M. or Days On Market graph above is a little misleading as when data is pulled from the M.L.S. (Multiple Listing Service) the D.O.M. starts with those condos that have been on the market for a year and most listings are only good for a year. As we collect data closer to November ’09 is when we start to see New Inventory For Sale come onto the market and subsequently the D.O.M. drops.
Getting back to what I term, the “Best” Kakaako condos because of unit sales volume, most popular configuration (2 Bedroom F.S.) and Avg. Sold Price chosen by buyers, we can now see, below, how these condos fair amongst themselves.
From January ’09 to November ’09 we can see that the Moana Pacific has been the number 1 choice of buyers out of these 7 buildings.
Please also note from this pie chart above, these 7 buildings represent 72% of all sales in Kakaako. The “Total 130” is for all Kakaako 2 Bedroom F.S. condo sales.
At this point we can now explore the details for each of these 7 buildings and how they fair between themselves and also look at the newest data available for the month of November ’09.
Again, the “Total 52” is for all 2 Bedroom F.S. condos in Kakaako. The largest amount of available inventory For Sale is at the Koolani and the Moana Pacific.
What is going into Escrow for the month of November is the Koolani and the Keola Lai.
I track A.C.S. more closely than sold data. Sold data is mostly 60+ days old and A.C.S. or Active Continue to Show is data that is 4 days old. This category is what is in Escrow with Just Accepted Offers. This helps us to see what is happening now instead of older Sold data.
Please remember the “Total 15” is for all Kakaako 2 Bedroom F.S. Solds. In this case, it is the Nauru Towers that was the number 1 choice of buyers but also remember, this data is from when these units first went into Escrow approximately 60+ days ago.
Let us look at each of these condo buildings more closely now that we have an overview.
It is best to keep in mind on the more expensive condos that the unit sales volume is so low (Not every one can afford a $2,000,000+ condo) that this graph above does not represent a loss in Average Sold Price but represents sales in this building that for any given month, some may have been at lower price points and some at higher.
Please note that ’08 was one of the worst sales years we have ever had for all Oahu sales, condos and Single Family Homes alike.
Please note that the same aspects for low unit volume of expensive condos as noted previously above apply to this building as well.
The average sold price can be safely said to have dropped -7%.
This is a +54% increase in unit sales volume over ’08.
909 Kapiolani Blvd.
Now we should have a clearer understanding of the Kakaako Luxury Condo Market. Many buyers are making this area their choice for investments as the units and buildings are fairly new. The amenities are great and best of all, this area is not only under increased development but is closer to the water with fantastic Ocean views, unlike many of the older or even newer buildings in Waikiki that are Luxury condos.
What we have seen from a sales standpoint from each of these buildings may not look like much so lets look at it another way:
All Kakaako 2 Bedroom F.S. Statistics
Total Sales January ’09 to November ’09 = 130 Units Total $ Volume of Sales January ’09 to November ’09 = $99,386,000.00
Best of Kakaako 2 Bedroom F.S. Statistics ( 7 Condo Buildings )
Total Sales January ’09 to November ’09 = 96 Units Total $ Volume of Sales January ’09 to November ’09 = $82,910,000.00 Or 83% of All $ Volume Sales in Kakaako
This is obviously a lot of sales and a lot of sales volume not to be noticing. Although the sales rates / month in Kakaako are low, when we step back and take another look at what they have done in the past 11 months of this year, you have to admit it is impressive!
Kakaako Area Map
Who would not want to live here! Great views, great amenities and close to Waikiki and Down Town.
As for relating this article to how the success of Kakaako sales may affect the overall Oahu Real Estate Market, one has to consider that close to $100,000,000 has been purchased since January '09 of Kakaako Luxury Condos, so there are plenty of investors out there.
Sometimes it may slip our minds that we are an International Real Estate investment area but it is important to remember that these sales mean that buyers consider Oahu a good investment right now.
We may all be still caught up in the Real Estate news that reports our decline of equity, the wave of Foreclosures and Short Sales taking place, but if you take into consideration the huge amount of investment $'s taking place in Kakaako and that the number of unit sales, all over the Island have almost never been this high before as we saw in the late Fall of '09, we should consider ourselves fortunate.
The First Time Home Buyers Tax Credit is currently estimated to be responsible for 51% of total sales. Finally a Government program that works! This is creating a stabilizing effect upon the Real Estate Market and creating jobs and much needed tax revenue for our State.
What we must remember is that this fragile recovery taking place is just that, fragile. The U.S. $ is taking a beating and while our Government continues to pass bills without reading them, without them even being in print and spending money we do not have, we may see the $ drop further.
The declining $ is most likely one contributing factor in our increased sales from over seas investors, but it would be disastrous to us all if the International investors remove themselves from our credit markets and stop buying U.S. debt.
On the Horizon in 2010 is still yet another wave of A.R.M. Option Loans that are expected to default as well as more Foreclosures and Short Sales and this will effect us too here in Hawaii. The size and impact of these conditions headed our way is estimated to be larger than what we have seen to date.
This is a fragile recover taking place and we must not let efforts by our legislators here locally to dramatically increase the Property Tax rates for Non Resident Owners which is exactly what our City Council is proposing to do when the legislature reconvenes in January 2010.
Over 200 Condos are sold in just the Waikiki area everymonth. This is our 'Life Blood.'
I urge you all to stay informed and remind our local government legislators that this is a fragile recovery and we must protect it.
Due to the release dates of data from the Honolulu Board or Realtors not occurring until the first week of every new month for the previous month's sales and the earlier submission deadlines for Oceanic Cable articles I was not able to present you today with an analysis of 2009 sales results.
Mike Gallagher, Realtor-Broker, Broker in Charge, Abe Lee Realty Mikeg@hawaii.rr.com 808-384-9015 Ethics Complaints Review Committee Member
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