Prudential Releases New 2007 Report For Oahu Real Estate
Prudential Locations, Hawaii's largest locally owned and operated real estate company, released today a new report detailing the performance of Oahu's real estate market in 2007. The report analyzes real estate trends and indicators for Oahu's single-family home and condominium sectors, revealing that the market fared well in 2007 -- especially when compared to down turning markets on the mainland.
"After looking back on 2007, we found that even as home prices fell across the nation, Oahu's single-family homes and condominiums continued to appreciate. Even though home values rose at the slowest rate seen in the past five years, prices reached record highs when compared to last year," said Scott Higashi, Prudential Locations' executive vice president of sales. "Throughout 2007, the overall market experienced fewer sales transactions and returned to a healthy and sustainable sales pace, which we last saw in 2002."
Oahu's average single-family home prices rose 2.4% to $645,000. Fittingly, more than half of Oahu's key residential areas saw an increase in median price, most notably in moderately priced neighborhoods such as Manoa and the Leeward Coast. Shifts in median price typically range from -4 percent to +6 percent. The North Shore's single-family home market experienced the largest decrease in median price, falling 11.8 percent. This neighborhood trend can be attributed to the fewer number of sales and the wide variety of prices in the area--ranging from agricultural homesteads to beachfront mansions.
In regard to sales, single-family home transactions fell 9.5% over the previous year across most price points, with the exception of sales in the $300,000 to $399,000 and the $1 million ranges, where sales increased, reflecting strong consumer demand for homes in these price points.
This decline in overall home sales is less drastic when compared to the 15.8% drop in sales between 2005 and 2006.
The median price for condominiums climbed 4.8% ending 2007 at $325,000--rising at an upward rate that outpaced the price increase in the single-family home market. The majority of Oahu condominium areas saw growth in median price. Most significantly, the Ala Moana/Kakaako area reported an impressive 53.1% price increase over 2006. This substantial jump in price is largely a result of new condominium projects in the area such as 909 Kapiolani and the Moana Pacific, which contributed to almost 20 percent of all neighborhood sales in 2007.
As condominium prices went up, the market saw a 19.7% increase in the number of sales at higher price points, with transactions increasing in the $450,000 to$499,000 and $500,000 to $999,000 ranges--indicating substantial demand for luxury condominiums. Condominiums at the lower end of the price scale saw a 1.3% decline in sales. As in 2006, the highest number of condominium sales occurred in the $250,000 to $299,000 price range. Overall, in 2007, condominium sales were down 12.5% - -a smaller decline than the sharp 23.0% drop in transactions the market saw in 2006.
In addition to sales and pricing trends, Prudential Locations' year-end report also takes a closer look at four real estate indicators to measure market trends. Prudential Locations has the state's largest in-house research department, and for the past 30 years has been dedicated to tracking Hawaii's real estate industry.
"We are very fortunate to have an extensive research division," said Higashi. "It allows us to examine current market indications in comparison to historical trends -- providing consumers with a long-term perspective that will help them to understand local market conditions and make informed real estate decisions."
When consumers evaluate the strength of the real estate market, the first indicator they look at is median price. This report shows median prices over the last 30 years, so that consumers can see the long-term trend of rising prices. While there have been short periods of falling prices, home prices continue to increase over time - proving that a home purchase is always a reliable investment.
Coupled with median price is price appreciation, which measures how much a property increases in value over time. Even though the rate of price appreciation has slowed in the last two years, over the last 30 years, the market has experienced significant price appreciation every ten years and continues to show positive price growth.
Another way to measure market strength is by examining days on market -- the number of days from when a property is listed to when the property goes into escrow. Low number of days on market correlates with strong market conditions. In 2007 when compared to last year, days on market for single-family homes experienced a slight increase to 43 days while condominiums days on market went down one day to 48 days. Although these days on market numbers are up from the record-low of 15 days set in the real estate golden year of 2005, this indicator is still relatively low when compared to the last 30 years.
The final indicator Prudential Locations looks at in this report is months of remaining inventory, which is the amount of time that the number of current listings would take to sell out at the current rate of sales. When months of remaining inventory falls under six months, it is a sign of a healthy market. When compared to 2006, months of remaining inventory increased due to the lower number of sales. On average, single-family homes reported 5.8 months and condominiums 4.9 months of remaining inventory--remaining below the six month mark.
Prudential Locations will soon be releasing its annual forecast for Hawaii's real estate market in 2008.
Prudential Locations has the largest real estate research database on the Oahu market, and is the only source for detailed and concise information on not only the 15 areas identified in the report, but for more than 200 specific neighborhoods. The research is available to consumers through Prudential Locations agents or the website, www.prudentiallocations.com.
In each month's Prudential Locations report, consumers will find key statistics for 15 Oahu areas such as sales volume and median price over a three-month comparison along with key insider observations. Prudential Locations' Oahu Real Estate Report is issued during the second week of each month.
About Prudential Locations
Prudential Locations LLC is a multi-faceted real estate company with a rich kama'aina tradition in the islands of Hawaii that boasts over three decades of extensive local experience and connections to offer its clients. To benefit customers, the Prudential Locations web site, www.PrudentialLocations.com, shows every home, land, condo and real estate listing on Oahu, Maui, Big Island, Kauai, Molokai, and Lanai, with detailed property information to assist its clients. By being a leader in real estate market research and knowledge and continually training more than 280 real estate agents, Prudential Locations produced more than $1 billion in sales in 2007. Prudential Locations Hawaii is ranked in the top 4 % of all Prudential Real Estate affiliates. Prudential Locations was established in 1969 with offices and affiliates throughout the state, and is an independently owned and operated member of the Prudential Real Estate Affiliates, Inc.