6a012876842898970c0177440356af970d-800wi_362A couple months ago, economist Paul Brewbaker predicted that Oahu single family home prices would reach $800,000 within 3 years. 

Is he trustworthy?  Well back in 2003, he predicted that the median price on Oahu would increase 60 percent from $380,000 to $600,000 by 2005, and he was exactly right.  Anyone that didn't listen to Brewbaker back then must be kicking themselves. 

So what about next year?  Brewbaker said he now expects median prices in the $700,000s could appear in 2013. That's an increase of nearly $100k in 1 year!

The University of Hawaii Economic Research Organization (UHERO) expects the median price to be a little lower than Brewbaker's lofty prediciton.  However, they do predict homes will have a median price of $787,400 in 2015, with condos rising to $360,400 in 2015 from $300,000 last year.

The forecast represents a 37 percent jump from last year's median price of $575,000 and a 22 percent gain from the peak of $643,500 in 2007.  Through June 2012, Oahu's median home sale price is up 8.7 percent to $619,750. 

Brewbaker cites building permit data going back 70 years, and said there were only two years in that time when housing permit volume was lower than it was last year: 1942 and 1943. "It took world war to make less new housing available than there is being produced today," he said.paleka016_700

What will cause such a rise?  Simple: the lack of inventory.  The island is not getting bigger, but the population is growing. There are basically no new homes being built in Metro Honolulu, Hawaii Kai, Kailua, or any of the other areas East of town. Sure there is new construction in Ewa, but it's simply not enough. 

So what will home prices do next year?  They will go up, probably to about $700,000 median, which by the way, is more like $1 million in East Oahu. 

Here is the original Star advertiser article