Sold in 3 days with 4 offers! Is the Oahu Real Estate Market slow?

I just closed this house in Ewa Beach recently, with 4 offers within a few days. While the market has slowed in Ewa more than most areas in Oahu, you can still sell a house quickly. How?

Well first of all, the owners did a lot of hard work. They replaced the floors with new wood laminate and new carpet. They changed the kitchen sink, the bathroom vanities, painted inside, and got their yard green. They worked on their house every night after work for weeks. So while other houses sat, this one stood out above all the rest. While other houses in their neighborhood didn't sell, this one got several offers very quickly.

We also priced it just a little above a recent sale in the neighborhood. The last sale was $370k for a house in much worse condition, and we listed it at $388k, and sold for $381k.

Price is almost always the best way to sell a house, but the condition of the house is just as important. If you want to sell, you've got to make it look it's best and price it aggressively. Hey this isn't rocket science. This isn't new, fresh, or innovative. This is just regular old real estate 101. But for some reason many sellers are not willing to make their home look good enough or price the house well enough.

Interest Rates drop again, 9 years later. More fuel for real estate in Hawaii?

I have been wrong every time I have tried to guess which way rates would go. In 2005 I was certain that rates would be 8-9% by now. In 2007 I was sure again. 3 months ago, I was sure I was finally going to be right. And now I'm wrong again.

It's September 2008 and 30 year fixed rates are down around 5.5% with 1 point again. It's amazing really, that you can borrow $600k and it only costs about $3600/month.

While most people have been wrong like me, we're glad to be wrong on this. Low rates means more buying power for buyers, and another opportunity for any who have been waiting to buy. Prices are down in some areas in Oahu, and certainly the other islands, and now with rates down again, it could be the best time for those who have waited patiently.

But who knows, I've been wrong every time so far...

Real estate in Oahu continues to be strong even after years of people's predictions that prices would come down all over. People thought that even East Oahu might decline, but they were wrong for the most part.

And while the stock market crashes day after day, housing prices in Oahu continue to hold. Just to continue my streak of wrong predictions, I'm going to predict that prices will plummet this year. I'm sure that will be wrong. Again.

Oahu Real Estate market update

The stock market is crashing. Lehman is gone, Fannie is in conservatorship, and the DOW is down 20% in the last 12 months. Foreclosures are now common in virtually every neighborhood on the mainland. But what about Hawaii?

The correct question is - what about Oahu? While Maui, Kaui, and the Big Island have been declining in both price and sales, Oahu somehow has avoided the mess of the rest of the country. How? Why?

The number of sales on Oahu has declined more than 30% since last year, but that's not saying much since sales were at record highs for several years. And while prices in Ewa and Makakilo have dropped siginificantly, the median price in Oahu has remained about $625k for a couple years, and prices in Honolulu, Kailua, and East Oahu, have remained at about the same levels as last year.

Here are the factors that seem to be propping up the market here.

1. Home owners in Oahu tend to own their homes for between 10-20years. It's so hard to get to the point where a family can buy a home here, that when they do, they tend to own it for a long time. Also people that grow up here often live with extended family. That makes it a lot harder to move since you are moving more than just your family. To comparie, the average time of ownership in California is more like 3-5 years. So in Oahu the inventory of homes has remained relatively low.
2. It's a tiny island. There isn't much more room to build, and there isn't much building happening now. So when people move to Oahu from somewhere else, there isn't much choice. You often have to buy an old home and fix it up. You often have to wait for the right home to become available because there isn't much to choose from. There isn't a ton of vacant land to buy either.
3. Higher loan limits - we can buy up to $625k on a conventional loan in Hawaii.
4. The nicest areas of Oahu have zero room to grow - Diamond Head, Hawaii Kai, Kailua, Kahala. Nowhere to build means you have a limited supply and still a growing demand.
5. Jobs - the people on Maui, Kaui, and the Big Island have very limited jobs, while the headquarters for all major business in Hawaii is located on Oahu. Our government is primarily on Oahu too.
6. Less risky loans. The vast majority of Oahu is asian, and many Japanese like me. We Japanese are very financially conservative, so we don't like adjustable interest only zero down loans. You can blame those types of loans for a large percentage of the loan defaults in America. Almost everyone that buys in Honolulu does so with 20% down or more on a 30yr loan.
7. International buyers - lately I've had Australians and Canadians contacting me with their stronger currency, looking at properties that cost them less now even though they haven't decreased in value. They have 20% more buying power on the same properties, so why not buy now? I have some clients who have swooped in from Canada to take advantage, and now they are enjoying the fruits of their patience.

Where is the market headed? Who knows. If we follow the rest of the country as usual, we are heading down. But this isn't Vegas or Los Angeles or Miami. It's Oahu, where everyone's dream home is. It's an international destination spot with jobs galore, for now.