Year-End Reflections: The 2013 Market
If you sold your house this year, there’s a 1 in 3 chance that you sold it for more than the asking price. If you sold your condo, there’s a 1 in 5 chance that you sold it for more than the asking price. That’s the highest rate of “bid-ups” that this island has seen – and it’s one of the biggest real estate stories of the year.
To understand why so many homes are selling over the asking price, let’s talk with Scott Higashi, EVP of Sales at Prudential Locations. His firm has a dedicated research department that tracks and analyzes the key indicators for Hawaii’s real estate market.
“Homes that sell for more than the listing price, or bid-ups, are the most sure indicator that prices will continue to rise,” says Higashi. “In 2012, we saw bid-ups in 21 percent of single family home sales – which is a notably high rate. This year bid-ups are over 30 percent of home sales – an all-time record high.”
The median price is the middle price of all homes sold: half the homes sell above the median and half sell below it. “After the last price run, median prices plateaued, which is typical of a stable market,” Higashi says. “This year we’ve seen prices increase steadily, building on the increases of last year, but they haven’t yet hit the rapid rate of growth seen in previous boom markets. This is good, as it indicates stability and strength in the market.”
This year’s median prices are also at record highs: Single family homes’ median price of $645,000 is equal to the previous record set in 2007 and condominiums are at a new record high of $333,000.
NUMBER OF SALES
Sales this year are higher than last year. Sales of single-family homes were up 7 percent in 2012 and are up 9 percent this year. Sales of condos were up were up 9 percent in 2012 and are up 14.5 percent this year.
Higashi notes that “sales have been improving over the past few years in a steady upswing since they bottomed out in 2009. We’ve seen the pace of sales increase each year since then.”
The pace of sales is speeding up, but it hasn’t taken off yet like in previous price runs. Higashi explains that this is an unusual occurrence: “The very high sales-price-to-list-price ratio, and specifically the percentage of bid-ups, tell us there is strong buyer demand – that we would have more sales if we had more listings. But the lack of listings is keeping the number of sales down. There just isn’t the inventory to fill the demand.”
Active listings have steadily decreased in the past few years, a unique trend that is unlike what has been seen in similar markets in the past. “Historically, when the market is climbing, the number of listings increases or holds steady. Fewer listings, as we are seeing today, puts increased pressure on prices,” he says.
DAYS ON MARKET
As one would expect with high buyer demand and little inventory, the average days on market (DOM) for new listings keeps dropping as the buyer pool snaps up the available homes. “DOM usually follows cyclical trends, since there are times of year (spring and summer) when more people buy than other times (winter). However, we’re seeing very low DOM for single-family homes relative to the time of year and DOM is still dropping for condos. The only time we’ve seen DOM this low was during the last sales peak of 2004 and 2005.”
These are the overall numbers for Oahu, but as Higashi points out, each individual neighborhood on Oahu has its own trends and market dynamics. Particularly in a rising market, it’s important to understand the specific activity of a neighborhood. As a buyer or seller, it’s critical to understand the competitive landscape.
If you’re interested in the latest activity of a specific neighborhood, contact a Prudential Locations agent at 377-4646.