Once again I am currently in Atlanta Georgia visiting with my parents who both refuse Assisted Living and I am enjoying the time I am spending while making sure they are both safe and healthy. They are both fine, old, but fine and a constant source of laughter that only two older folks can provide such as…”What?” “What did you say?” “I did not say anything.” “What did you say?” It is funny but a constant reminder that someday if I am lucky enough I will be just like them.

Since we are in the Fall/Winter of the year I thought now might be a good time to write about what the year has brought in terms of Real Estate on Oahu as very soon it is going to be 2012.

Due to article submission dates I will not be able to advise you fully on the results of 2011 until February 1st 2012.

As the market has progressed over the past ten months we can look back as we do with the graph above and see the fluctuations, up and down for the Average Sold Price since year 2007. We can see the low point was January 2009 when the Average Sold Price was $539,000 or a 10% drop from January 2007.

Since January 2007 to October 2011 the Average Sold Price for Single Family Homes has dropped 4%. But what does this mean? Does it mean that my home is now worth 4% less than before? The answer is no. All that this means is that the Average Sold Price has dropped, nothing more. It means that with all of the collective sales for the year, buyers have chosen to predominently purchase in lower price ranges, therefore, the drop.

The drop is for all of the Oahu Single Family Homes and does not speak to the individual neighborhoods that may be far different. Yes, the individual neighborhoods are included in the drop but when seeking a current home value you must compare your home to similar, like homes in your immediate area that have sold in order to realize what your current home value is. This is done through the means of examining the last six months sales in your immediate area, comparing feature to feature of those homes sold with yours and averaging the Sold Prices out of those homes sold, like yours in the last six months to arrive a your current home value.

All of the conclusions I supplied above to the Single Family Homes also apply to all of Oahu’s Condo sales. The value has not dropped 5%, it only means that the buyers chose to purchase in lower price ranges.

Another point to make sure you understand the basics of the Real Estate Market is that when looking at the above graphs we can all see a big drop in Average Sold Price since January 2007 but we can also see how the Average Sold Prices have recovered when we compare the whole from January 2007 to October 2011. If anything, you should now realize two things:

1. The market is analyized over the long term and Real Estate investments should be viewed as long term investments.
2. The market we are now in is a “Flat Line.”

On the Single Family Home graph, see how the Average Sold Price is hovering just below the $600,000 line and for the Condos it is up and down all along the $300,000 price line? We are and have been for some time in a Flat Market. Is this a bad thing?

In my opinion, the answer is no, because the Average Sold Price has neither gone up or down but pretty much has remained even or flat lined. It did not go down which would mean only the bottom end of the market priced homes are selling and it did not go up. It would be nice if the Median Sold Price went up as it would indicate a lot more faith in the market and a healthier market, but it is not happening in today’s economic environment with an all time low in Consumer Confidence.

The market will go up, it always does as the influences of Economic conditions, the aging of the population, inventory of homes, etc. come into play in a positive way. It is neither good nor bad in the Real Estate Market right now, but I also believe it is more good than bad as the market is not going down. The market is a “Flat Line.”

Yes, I do see positive changes ahead of us but it is with caution as two very important circumstances exist that still have to be played out:

1. There is close to 2,000,000 Pre Foreclosure Homes that are not even on the market as of yet as the Lenders have been holding onto them until recently and that is why we are now seeing a steep climb in Foreclosures as they are coming onto the market. In addition, the inventory of foreclosures will continue to climb for the foreseeable future as more and more home owners are having trouble in paying their mortgages and their home values are continuing to go under water in increaseing numbers. This Pre-Foreclosure inventory is known as the “Shadow Inventory.” I recommend going to the internet and learning more about it. One of the best sites out there is www.corelogic.com
2. World Wide Economic conditions particularly in the E.U are going to affect us whether we like it or not.

We all will just have to see how the next few years will play out. It is a possibility we have not seen the worst of the Economy nor the Real Estate Market. So I say, “Proceed with Caution” but proceed. The Real Estate Market is performing well in Hawaii (mostly due to Foreign Investors) interest rates will never be this low again, well at least for the balance of my lifetime and probably many of yours.

If you want to stay in tune with the Oahu Market I invite you all to sign up for my once/month email newsletter and an example of one is on my website at: www.hawaiirealestatestatistics.com

Probably One of the Best Research Sites for Housing on the Web:
http://www.corelogic.com/#home-research

Or you may want to check out these articles on the Web:
http://www.miamiherald.com/2011/10/15/2456154/shadow-inventory-of-homes-could.html
http://money.cnn.com/2011/08/22/real_estate/foreclosed_homes_shadow_inventory/index.htm

As you can see with the Single Family Home New Listings comparison above the amount of New Listings in 2010 continued its downward slide leading into 2011 which became more flat line in the amount of New Listings coming onto the market.

I thought it would be interesting to see how the Expired & Withdrawn Listings by month compared over the past. It looks like in the later part of 2011 we had a lot less Expired and Withdrawn Listings.

That just about covers it for the recap for 2011 but right below is a Quick Recap:

Last, But Not Least…

How Well Is This Brokerage Doing In Selling Your Home For Full Price?

Yes, that is correct, the above graphs depict the Top Four Brokerages on the island of Oahu who do the most unit volume sales and at the best of times they only sell your home At Full Price Or More…33% of the time!

I hope that you have enjoyed this report and if you would like to sign up for my Monthly Email Alerts just give me a call or send me an email you want it sent to.

I wish you all the Best for The Christmas Season and The New Year!

Thank you for your readership!

Much Aloha,

Mike Gallagher, Mike Gallagher Real Estate, Inc.
808-384-9015 mikeg@hawaii.rr.com