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What Honolulu’s Record High Median Means For You

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The median home price in Honolulu reached a record high of $719,500 in November. This exceeds the summer high ($700K in June ’14) and reflects a 5% increase over last year. This year-end peak follows a $50,000 drop in median home price between June and August.

Three months ago, I wrote an article in which I highlighted a notable trend in Honolulu real estate, making two main observations:

1. That median prices tend to take a dip in the autumn, between highs in the summer and winter
2. That the end-of-year peak will likely surpass the summer peak.

Here’s an excerpt from that September post:

“In two out of the last three years, the median price in the winter exceeded the previous summer high. While we can’t say with certainty that the median price this December will be higher than $700k, it’s a safe bet to say that it will be higher than August’s $650K.”

And so the trend holds. I created the chart below so you can see the ebb and flow from 2011 to 2014.

Median Sales Prices on Single Family Homes (Oahu)

Midyear Peak

 Autumn Low

Winter Peak

2014     

$700,000 (Jun.)

$650,000 (Aug.)

$719,500 (Nov.)

2013

$677,250 (Jun.)

$647,000 (Jul.)

$685,000 (Dec.)

2012

$664,000 (May)

$609,000 (Aug.)

$640,000 (Dec.)

2011

$595,000 (May)

$557,500 (Aug.)

$605,000 (Dec.)

Confidence for sellers and buyers

This is encouraging news for both sellers and buyers.

Sellers can take confidence in the fact that Hawaii’s real estate market is still going strong. “The demand for homes continues to outpace current inventory levels.” said Honolulu Board of Realtors President, Julie Meier. More demand than supply means higher prices and therefore, more money for the seller.

Buyers can also take confidence in the strength of our market. When the cost of a commodity rises, so does its value. For instance, the higher the price of gold or oil, the more valuable it is. Similarly, as home prices have been on the rise in Hawaii, we have seen a corresponding rise in home values. The trend of a healthy annual increase in Hawaii home value is good news for future home owners, as owning Hawaii real estate remains a solid opportunity to build wealth.

Importance of finding a good realtor

But how important is it really to track trends? Not nearly as important as finding a knowledgable realtor — especially in a unique market like Hawaii. Good realtors are able understand trends and act accordingly. For example, on a recent sale, our buyer’s offer beat out three higher priced offers on the same home.

What made our lower-priced offer stronger than the others? We included an appraisal clause in our offer (which none of the other agents did for their clients). Upon hearing that all offers were over asking price (as would be ours), we asked our buyer if they would be willing and able to furnish cash to cover the difference if the appraised value came in under their offer price. If so, the seller wouldn’t have to worry about the deal falling apart because of the loan.

In the end, the appraised value matched our client’s offer price! And because there was no difference, the loan was funded with no hiccups and our client never had to bring in the extra cash we referenced in the contract.

What does this have to do with the rise in median home prices?

We didn’t just get lucky. We saw the trends and anticipated that the home was worth more than what the seller was asking. In light of this, we let our client know his options and the associated risks, equipping him with the information he needed to make a confident decision — a decision that paid off in the end.

But it all starts with one decision: which real estate professional will you choose?

 

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