Home prices flat, but don't wait for a drop
Even with all the talk about the slowing real estate market, prospective homebuyers waiting on the sidelines for prices to drop may want to rethink their strategy. Although the number of single-family homes and condominiums sold has been on the decline since Hawaii home sales peaked in the third quarter of 2005, prices have remained at or near record highs on every island. And they are likely to stay there. "I'm not going to predict a decline in prices," said Leroy Laney, a professor of economics at Hawaii Pacific University and economic consultant for First Hawaiian Bank. "I think a much flatter market is what we can look forward to. If we do have declines, we won't have major declines." Bank of Hawaii chief economist Paul Brewbaker noted that "already there has been a bit more vigorous pull-back on some of the Neighbor Islands," but those declines are still in the low single digits. "We're looking for a 'flattening' more than a 'decline,"' he said. What we are seeing now is a more normal market, according to Harvey Shapiro, chief economist for the Honolulu Board of Realtors. "Things are normal," he said. "The market slowed down, properties take longer to sell, but prices are holding and from what I can see they'll continue to hold into the next couple of months." Shapiro is predicting prices will stay within a narrow range, plus or minus 5 percent, for the rest of 2007. "Certain properties will go down and certain properties will go up," Laney said. "In these markets locally it depends on the mix going on the market." For example, if more higher-priced homes are sold, it will push it will push median prices up, and if more lower-priced homes are sold, it will push median prices down. Statistics compiled by Prudential Locations from the most recent three-month period, from December to February, show the median price for a single-family home on Oahu was $612,000, a relatively flat 0.7 percent increase over the same period a year earlier, when the median price was $616,500. Condo prices rose nearly 3 percent during that time to $315,000, up from $306,000 the previous year. Historically, home prices in Hawaii rise over a very short period of time and then remain flat for a time before rising again, Shapiro said. The exception was after the last upturn, when pices fell five years in a row, starting in 1995 up to the start of 2000, according to the board's market statistics. "In Hawaii, we don't lose ground very often," he said. "Anyone who's expecting 2001, 2000, prices, they're going to be sitting there forever and they'll miss the next upturn." Shapiro said it's unlikely prices will decline this time because there is still sufficient demand to keep prices up. And despite the number of homes and condos sold being on the decline, it's still "much nearer the peak than the valley," Shapiro noted. In 1995, fewer than 4,000 single-family homes and condos were sold. By the last peak in 2005, that number had ballooned to 13,000 properties. "Right now we're back down to 10,000," Shapiro said last week. "We're still at a relatively high level."
