The Hawaii Market already crashed, but you may not have noticed. 

The median price in January showed signs of a market that declined all of last year, and that is now picking up dramatically.  The median price fell from the peak of $1,153,500 in May 2022, all the way down to $970,000 in January! 

That's a decline of $183,500, which is almost 16%! 

In any market, a 15% correction is a big drop, and now we are seeing buyers coming into the market in droves! Just this week we opened 13 escrows in our group, with every active listing going under contract.  This means that buyers have decided that it's time to jump in! 

The evidence: Pending sales fell to a 2 year low in December with 168 pendings, but now in January there were 267 pending sales.  That's almost the same number as pending sales in December 2021, when the market was red hot. 

I just had a mastermind with 500 agents from around the country, and all of them said that their markets have been heating up, with buyers back in action.  

If you've been waiting for the right time, that was probably last month.  The next best time is now! 

I bought my house in 2007, knowing full well that the market bubble was about to burst.  Why did I do that? Because I wanted to live in this house, the one I still live in 15 years later. I paid $1.2mil for the house in 2007, and at one point the value fell to about $1.1mil, but now it's worth well over $3million.  

I tell you that because even now, as the market has softened and the number of sales since January has dropped nearly 40% since last year - there are signs of opportunity in Hawaii real estate.  While prices are still 9.5% higher than they were a year ago, there is one number in the November market report that hints at opportunity: The percentage of sale price to list price. 

Last year, buyers were paying 3-10% over asking prices, but this past month, for the first time in what seems like forever, that number has dropped under 100%, to an average of 98.4%.  That's the average for all single family homes, but in the $600k-$700k range, the average home received 93.8% of list price, and it was only 90.2% in the $450-600k range. 

Now you can't buy much in those "lower" ranges in Hawaii, but it shows that sellers are accepting offers nearly 10% below asking price! It also happens to be pretty low in the range over $3mil, at 92.4%.  A nearly 8% reduction on a $3mil house is $240,000! 

And since most sales are done with a seller credit these days, that means sellers are actually getting an even lower price that doesn't show in those market stats. 

If you've been waiting to buy - now is the time to get nearly 10% off a house, when you add in the 3% seller credit that you're going to ask for, which can buy down your interest rate into the 4.75-5% range.  

Now is the time to strike! And yes, I'm trying to buy more real estate for myself as well! 

Yes, the number of sales has dropped dramatically - by 41.7%.  That's right, the number of sales has dropped nearly in half since last year, 2021, which was the craziest year in real estate history. 

But while the market has slowed a lot, prices are still UP 5% since last year.  On a monthly basis, prices peaked in May of this year at $1,153,500, so from that time, the median price is down by about $100k to $1,050,000. 

Here's a chart of monthly median prices: 

It seems prices are back to about the same as January, which makes sense because buyers were going nuts offering way too high on listings earlier this year.  We needed to cool down, that's for sure.  

What's amazing is that listings are still selling in about 19 days, and the average listing sold at 99.8% of the list price.  

The most telling numbers are:

1. there were only 285 new single family home listings, which is far lower than last year at this time, meaning inventory is still very low in Hawaii. 

2. There are only 198 pending single family sales, which is down 50%, so sales will continue to slow for a while. 

With interest rates at 7.5%, (though most people aren't actually getting that rate) it's likely that prices will soften through next year until rates level out or drop.  

Buyers are finding opportunities to ask for seller credits and offer below asking price, as many sellers are still thinking like it's 2021.  Smart sellers are pricing at the low end of their markets to make sure they get sold quickly! 

The number of sales dropped 20% since last year but median sale prices have risen again.  Last year was a crazy year of sales and things have now normalized.

Despite the Year-over-year sales drop, the last 4 months have remained steady - The average number of single family homes sold (March through June) was 346 and the average number of condos sold was 664. This volume is comparable to pre-pandemic levels! Although pre-pandemic, homes stayed on the market twice as long. 

While sellers are receiving their full asking-price or more, we did see price corrections in the active inventory. Buyers are reevaluating budgets and strategies as interest rates are rising quickly. Also, the active inventory is still a fraction of what was available in 2019.

Compared to last June, sales of condos in the $700,000 - $900,000 price range have doubled. For Single-family homes in June, most of the sales (29%) took place in the $1 - $1.5 million price range.  

Just listed - a beautiful single level Hahaione Valley home for sale for $1.85mil.  Single Level are some magic words in real estate, because there are hills everywhere but very few flat lots that allow for a single level house.  

Hahaione is in the heart of Hawaii Kai, close to shopping and has a great school.  We're happy to represent our past clients who have enjoyed this home for several years.  

Check out the large living room and the super cool rock wall. 

The kitchen was updated with custom cabinets and a new island with a cool hanging light. Everyone loves a large kitchen! 

Hahaione valley has constant cool breezes, and rains more than most parts of Hawaii Kai, keeping it cooler at night. This property also has a nice flat yard for the kids. Flat yards are hard to come by in most areas of Oahu. 

And my favorite part is the outdoor living space, this huge lanai with room for the whole family to enjoy. 

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The first quarter of 2022 closed with new record median sales prices for both single-family homes and condos at $1,150,000 and $515,500, respectively. How did that happen?

Fewer single-family homes were sold in March and the first quarter, with the most significant decline occurring in the $899,999 and below range, down 56.3% with just 70 closings in March.

On the other end, the luxury single-family home market is picking up with 27 single-family homes sold in the $3 million and above range, marking a 68.8% jump year-over-year.

In the condo market, sales in the $700,000 to $799,999 range recorded the highest volume increase, up 125.8%, with most of these sales occurring in the Metro and Ewa Plain regions. 

“More luxury sales coupled with declining affordable inventory and sales are pulling the median price upwards in the single-family home market,” said HBR President, Chad Takesue. “It’s no surprise that rising prices are pushing more prospective buyers to consider condos, driving the steady and strong demand we’ve been seeing for these properties.”

"In 100 years." is what I joked to my friend Chris who asked me this morning, "When will the market slow down?" The Hawaii real estate market has little to no inventory, which made the median home price rise to yet another new record high of $1,125,000, up 22.6% from this time last year.

The condo median sales price rose to of $497,000, up 8.6% from one year earlier.

The key is that there is no inventory, and I have no idea when that could change with more and more remote workers wanting to move to Hawaii.  And it's possible that Hawaii real estate is the best hedge against inflation on Earth.  What else can you count on to be there for you if we have hyperinflation, or even just modest? 

Here are the numbers: 

When will it slow down? I don't see a catalyst to an end of this market end for a while.  Not war, not a stock market crash, not rising rates.  

When will Hawaii real estate slow down?  Are prices going up or down this year? I get these questions often, with so many people feeling left out of the market.  In January, prices continued to rise in Hawaii, with single family median prices at over $1mil and condo median prices at over $500k. 

But there is one big giant factor that many people are forgetting: There have been no Japanese people in Hawaii since 2020.  

In a normal year, Japanese buyers make up between 10-20% of all the purchases made in Hawaii, but since Covid started in March 2020, nearly 2 years now, Japanese travelers have been stuck at home.  From my personal contacts in Japan, I can tell you that they are chomping at the bit, anxious to get back to Hawaii and to buy real estate.  

Most Japanese buyers usually buy with all cash, since they can't get a loan in the US, and they tend to offer at asking price, because looking for a bargain or a 'deal' is not the normal Japanese way.  They see a price, they pay it.  

I predict that 2022 will be the year they return to Hawaii, and when they do, Hawaii real estate prices, mostly Oahu, and mostly condos, will spike one more leg up.  So do you want to buy before the Japanese return or after?  

Not everything in Hawaii over $1million!  Check out this great value in Waikiki for only $299k in Waikiki Townhouse, which is rented for $1500/month. 

This corner unit 1 bed 1 bath condo has a nice renovated kitchen and the ability to use the enclosed lanai as a 2nd bedroom.

Recent upgrades include renovated kitchen and floors, and it has a washer/dryer in the unit. 

And a nice city view from the living room:

If your budget is up to $300k, this is a great opportunity! 

MLS 202132093, listed for $299,000 FS with a sandwich lease that expires Oct 2029.