By Lisa Lee
Those who follow the Hawaii real estate market have been trumpeting a turnaround: Indicators such as low inventory, number of sales, and sales-over-asking-price are signaling the return of a competitive market.
The luxury market appears to be following suit.
“The numbers are encouraging and our agents are seeing renewed activity in the high-end neighbor-hoods,” says Robin Markle, vice president of New Home Sales at Prudential Locations.
Sales in the luxury home category declined significantly in 2009, but have been rebounding since then. Sales for the first half of 2012 show a solid increase of 18 percent over the same period in 2011.
The biggest sign of change is the continued reduction in the number of homes for sale. “One in every five Fine Homes neighborhoods has no available inventory” says Markle.
In Kahala, the leading luxury neighborhood, the months of remaining inventory is unusually low at 5.5 months. Glen Fujihara, a Fine Homes Premier Specialist at Prudential Locations, says Kahala is even hotter than it looks.
“Although you see ‘for sale’ signs on the street, so many of these homes are actually in escrow. Once they close, the next move you’ll see will be price increases,” he says. “It’s inevitable.”
Judith Jackola, who specializes in luxury condominiums at Prudential Locations, agrees that falling inventory is creating bigger demand. She is seeing luxury condos in Ala Moana and Kakaako spend very little time on the market.
“There’s no problem selling here,” she says. “If you’ve got an ocean or Diamond Head view and you’re priced right, you’re pretty much guaranteed to sell within 30 days. I’ve seen some units sell in a week, or even a day.”
Fujihara believes the sudden burst of activity is due to a combination of factors. “Human nature is to see where the bottom of the market is, and we’re now on the rebound,” he says. “Buyers sitting on the fence see that it’s time to get off. They see that the inventory is changing.”
According to Fujihara, market turnarounds happen quickly and the market is turning now. “The general public is at a disadvantage, because they can only see what’s closed, not what’s about to close. Once a buyer learns from their agent that all the listings they see are actually in escrow, they realize that the market is changing. They don’t want to get left behind, so they start taking action. Where just a few months ago buyers had the luxury of taking their time and making selections, they don’t have that time now. The velocity has picked up,” he says.
Fine Homes specialists agree that market trends usually begin in or near town and flow down the east corridor. Julie Meier, another Fine Homes specialist at Prudential Locations, is seeing that eastward movement now.
“There are still some nice properties close to town, but it’s a matter of the buyers’ priority lists,” she says. “My buyers are looking for ocean views, ocean access, and ready-to-move in conditions. But, everything (near town) that’s nice and new is in escrow. So for oceanfront and ocean-access homes, we’re also looking at Portlock.”
As for ridge-top communities, “Waialae Iki was one of the last undervalued ridges, but we’ve seen it move up a notch with the prices that have closed recently,” Meier says. “Waialae Iki is realizing its true values.”
While local buyers are getting off the fence, international buyers may be growing, too. For Jackola, the Japanese market is rebounding. “In the past two to three years, we had growing numbers of buyers from China,” she observes. “But in the past three months, I’ve seen many more Japanese buyers in town. Last week almost all my showings were for Japanese clients.”
What does all this market activity mean for buyers? “Buyers need to get serious now,” Fujihara says.
“Whether buying or selling, in a market with multiple offers,” says Markle, “there is such benefit to working with a Fine Homes agent. They have the expertise to craft the best offers, to identify the best deals, and they have the established relationships that make for fast, smooth, successful transactions.”