How is the market? 5 people have asked me this question since this morning. Of course it's common for people to ask me this, but right now I sense that many people don't see a clear direction for the market right now.
We can look back and see that since last year prices around Oahu have risen 5% on average for all home sales on Oahu. But where is it going? Everyone wants to know .
(I predicted the bottom of the over 2 years ago, and also predicted the top of the market in 2005.)
First some median price data from the last 12 months.
- Hawaii kai prices are down 9.9% to $819,500
- Kailua prices are up 9.7% to $850,000
- Kaneohe prices are down 1% to $577,500
- Median prices in Mililani are up 19% to $602,500
- Diamond Hear prices are down $40k to $975,000
- Ewa beach prices are up 7.4% to $475,500
- Metro Honolulu prices are down 2.8% to $699,500
- Pearl City prices are up 3.4% to $592,250
- Waipahu prices are down 0.4% to $498,000
The problem is, there are very few homes for sale, and therefore very few homes selling. The inventory of homes available has dropped yet again, remaining at the same 5 year low we have been at since January. Since there will probably never again be any major new construction projects in Metro Honolulu or East Oahu, the inventory of homes for sale will remain low for the next few years, until there is some other major catastrophe or economic crisis.
So I predict prices will slowly rise for the next few years, and level out when interest rates rise in 2013. As rates rise, people will be less willing to sell their home and move elsewhere, due to the payment increase. There will be fewer buyers but also fewer sellers. I've had dozens of my clients tell me they "can never move again" after their most recent refinance. I'm in the same boat.