Real Estate Report - July 2023
O'AHU MARKET REPORT
Where is the Summer Sizzle? In past years, the market fires up in June, July and August, caused by people moving in and out of Hawai'i and those who want to upsize into a different home. The first month of the summer results are in and they are less than inspiring but with hidden potential.
Closed sales (-30% homes, -25% condos), pending sales (-24% homes, -17% condos), inventory in escrow (-27% homes, -15% condos) and new listings for sale (-17%, homes, -22% condos) all continue to fall compared to the same month last year. A trend that has become too familiar over the past 12 months whereby both demand for housing and the willingness to sell a home has been negatively affected by another increase in mortgage interest rates. The puzzling part is inflation is back under control, job growth is steady, the median income is rising and housing starts (the building of new homes) is increasing, yet the Federal Reserve continues to let interest rates remain at this level.
Could the market simply be warming the pan to prepare for the summer sizzle? While the indicators mentioned above are negative, they are less negative than, previous months which could signal a slow turnaround. Additionally, the overall inventory for sale increased for both homes (15%) and condos (16%) which offers more choices for buyers who have been waiting for options to hit the market. Prices have also come down slightly as the average price ($1,300,456 homes, $589,587 condos) and median price for homes ($1,100,000) and condos ($510,000) dropped by around 5% as compared to last year.
The recipe for the summer sizzle could be lower prices, more choices, and a drop in mortgage interest rates. The market is missing the last ingredient. If the Federal Reserve sprinkles in a slight drop in rates, it could be similar to adding some oil into the pan, turning up the fire or adding lighter fluid to the grille.