Real Estate Report - May 2023
O'ahu Market Update - Housing Prices Become More Affordable
As the real estate market on O'ahu continues to soften, the needle continues to move towards the center, allowing more choices for buyers, more time to make those choices, and an improvement in housing affordability.
For the second time this year, the median sales price for homes on O'ahu dropped below One Million Dollars, settling in at $999,995 a 9.5% drop compared to the same month last year. By definition, that means half of the homes sold in April were below $999,995 and half were above. Condominiums dropped by just 2% with a median sales price of $500,000. Slow demand back in February resulted in a drop in closed sales in April as home sales were down by 43% and condos down by 37.5%. With the drop in demand, April saw a corresponding increase in inventory, allowing buyers more to choose from. Home inventory jumped by 35.4% and condos by 24.8%. However, we still have a long way to go before we get to a neutral market. At the current rate of sales, if no new inventory comes on the market for sale, everything will be sold out in 63 days for homes and 75 days for condos. In a neutral market, we look for closer to 100 days of inventory.
Even though the market has been moving away from sellers for almost a year now, sellers are still benefitting from a short time frame to sell, with median days on the market of 24 and 20 days on the market for homes and condos, respectively. Additionally, sellers still garnered over 98% of their list price for both homes and condos during the month of April.
You may ask what it will take for homes to become even more affordable? The answer is an emphatic, “Inventory Increase!” More homes shift the negotiation leverage to buyers. While we have seen an increase in inventory, we still have less than 2000 units on the market (homes and condos combined), for a population of over a million people on the island. What should sellers watch for if they are trying to time the market? The answer is “Inventory!” Knowing how many other homes a seller will have to compete with, as compared to demand, will be a big clue.