Year-End Reflections: 2014’S Real Estate Market
As 2014 draws to a close, experts are reflecting on the unusual trends in Oahu’s real estate market. Home prices have hit record highs while inventory remains at record lows, and interest rates — instead of rising as many expected — have dropped again to record lows, incentivizing people to buy.
What does that mean to you, as you consider your real estate goals for 2015?
We talked with John Jacobson, senior analyst at Prudential Locations, to gain insight. Prudential Locations is the only firm with a research department dedicated to tracking and analyzing Hawaii’s real estate market, which they’ve been following for almost 45 years.
STRONG BUYER DEMAND
“Interest rates remain at near-historical lows, fueling the market and opening up new pools of buyers who are snapping up homes and condos as they come available for sale,” says Jacobson.
“Homes and condos are being bid-up over their asking prices at very high rates.” In 2014, one in every four homes and one in every six condos sold for more than their asking prices.
“It’s important to note that the ratio of sold-to-list price is at an all-time high, too,” he adds. This means that the amount over asking price that homes are selling for is greater than ever.
FEW HOMES FOR SALE, STILL
“The inventory for sale is also at near-record lows, and is very low compared to previous real estate market cycles. Usually strong buyer demand and higher prices encourage owners to sell and you see more homes going on the market in response to rising prices,” says Jacobson.
Other indicators may suggest that we are at the beginning of a market upswing that has not really taken off yet.[notdef] “Days on market, or the time that it takes to sell a property, are at record lows.”
HOMES SELLING FAST
As you would expect with high buyer demand and little inventory, the average days on market (DOM) for new listings is short as buyers jump on the few available homes. “This year, the DOM is 25 days for single-family homes and 23 days for condominiums. It hasn’t really moved from last year’s historical record lows of 23 and 21 days on market.”
NEW PRICE RECORDS
The median price is the middle price of all homes sold: half the homes sell above the median and half sell below it. Median prices have been climbing over the past few years, and this year they hit new record highs: At $670,000, the median price for single family homes is $20,000 higher than last year. The condominium median price $18,000 is higher than last year, at $350,000.
“After the last price run in 2001-2007, median prices leveled off and stabilized. Since 2012, prices have been steadily increasing, but they haven’t taken off running as in previous boom markets,” Jacobson notes.
Jacobson emphasizes that each individual neighborhood on Oahu has its own trends and market dynamics. “We’ve talked about Oahu as a whole, but as a buyer or seller, it’s key to work with an agent who knows what’s going on right now in your neighborhood. Especially when the market is rising, it’s critical to understand the competitive landscape.”
If you’re interested in the latest activity of a specific neighborhood, call Prudential Locations for a neighborhood expert at 377-4646.