The Real State Of Housing Inventory on Oahu
If you listen to the word on the street, housing options on Oahu are getting out of reach. With the median Single Family Home (SFH) prices climbing over $700,000 and median condo prices hitting $390,000, entering the market as a homeowner looks more challenging by the day.
For the past two years, overall inventory has been on the rise. Your options expand the closer you look. To get the full picture, you need to think in terms of market areas.
MACRO VS. MICRO
Former state economist and current owner of TZ Economics Paul Brewbaker has extensively researched the Hawaiian real estate market. His work describes a perpetual housing shortage stemming from the state issuing a maximum of 1,500 permits per year for new housing and the Oahu market requiring an estimated 3,500 new units per year. The resulting 2,000 unit disparity has been compounding the Oahu housing shortage for years, continually pushing median prices upward.
At a micro level, the situation is much more optimistic. Each market area on Oahu has its own pricing and inventory fluctuations, so while it is true that the median price is more than $700,000 and continues to rise, there are still plenty of houses and condos available for considerably less.
INVENTORY IS INCREASING
The increase in median SFH and condo prices on Oahu does not mean affordable homes have disappeared, only shifted locations. The inventory of SFHs has steadily increased since January 2013. As of June this year, the number of available single family homes (1,041) matches the highest it’s been in the past three years, with the exception of July 2014 (1,064). The growth shows no sign of stopping in 2015, as inventory for SFHs has grown 9 percent overall in Oahu this year from April to June.
There are plenty of options available in the condo market as well. For instance, finding a condo in Kaneohe would be difficult (inventory is down 41 percent since April 2015), but Hawaii Kai has an abundance of available options (up 36 percent since April 2015). Overall inventory in the condo market is up 38 percent since January 2013.
As inventory and demand shift across Oahu much like the tectonic plates responsible for its formation, so will the market areas with available inventory. The market rapidly changes, and Locations’ agents can help you remain ahead of the trends and maintain a competitive edge.
RISING PRICES ARE A POSITIVE
Oahu’s consistent home and condo value appreciation should be looked at as a positive thing. Homebuyers may pay more in this market than most other places in the U.S., but they’re also likely to see a larger ROI.
Think of it as an investment in a historically strong market where properties have appreciated in value an average of 6.9 percent each year since 1973.
Additionally, rent prices have doubled in the past 10 years at almost the same rate as home prices. Investing now means your equity will increase year after year instead of your expenses. Interest rate increases are at historic lows, but slowly increasing as are home prices on Oahu. The sooner you decide to buy, the more buying power you will have.
THINGS TO REMEMBER
1. Overall inventory for condos and SFHs is on the rise.
2. There are options available at all price levels.
3. Having a qualified agent is an absolute must.
Don’t get discouraged by stories of record median prices and shrinking housing inventory. The Oahu real estate market is all about perspective. Once you zoom in, the opportunities are endless.
Locations LLC has the research and experienced agents to keep you ahead of the market. Remember, this data changes monthly, and in order to stay ahead and get the house or condo you want at a price you can afford, you need an agent to guide you. Visit www.locationshawaii.com to browse available homes and find an agent who can guide you along your journey to homeownership.
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