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August 2023 Market Report

Market Snapshot


Aloha! I’m Mike Hegazy, your trusted on-island realtor. I wanted to share some insights about our current real estate market. Our island's market has maintained steady pricing compared to last year, despite seeing fewer sales due to higher interest rates and limited inventory. Interestingly, I've observed a surge in offer activity, with more buyers accepting the 7% interest rate. It seems buyers are adopting a "marry the home, date the rate" mentality. Many are opting to secure their homes now, knowing that if interest rates rise, they're protected, and if they drop, they can refinance. 

On the flip side, sellers are inclined to hold onto their properties thanks to these lower interest rates. As a result, they are more inclined to retain their investments, enjoying both the steady appreciation of property values and the attractive financing conditions they secured in the past. 

Mortgage Rate Update

I am trying to remain optimistically upbeat but unfortunately, today's news is less than encouraging. Just yesterday, mortgage rates were already nearing their highest levels in over two decades, marking an unpleasant milestone.
 
Despite job openings gradually declining since March, which is conducive to favorable interest rates, the pace of this decline has fallen short of our expectations. In fact, today's report revealed a substantial surge in job openings, skyrocketing from 8.92 million to 9.61 million.
 
To put things into perspective, it's worth noting that the estimated number of job openings likely needs to dip below the 8 million mark for the Federal Reserve to be confident that its policies are making the desired impact on the labor market and addressing concerns about inflation. When combined with the recent comments made by select Federal Reserve members and the unexpectedly robust ISM Manufacturing data, these developments have propelled mortgage interest rates to unprecedented long-term highs.
 
A noteworthy point to keep in mind: if this week's data continues to exhibit the same strength as today's, there's a possibility that rates could climb even higher before they catch a break. Either way, we will need to see some clear declines in inflation data before interest rates start coming down.
 
For those entering into contracts as buyers, my suggestion is to proactively secure your rate upfront and consider renegotiating if interest rates show signs of decreasing.
 
Furthermore, given the current environment of higher interest rates, both permanent and temporary interest rate buy-downs present appealing options for buyers. If you require assistance in calculating buy-down credit options, please don't hesitate to contact me, and I can connect you with one of my trusted lender partners. Your financial well-being is my top priority.

Market Overview

The real estate market has shown some interesting trends in recent times, and it's important to break them down for clarity.

Firstly, when we compare this year to the previous one, both single-family homes and condos saw a decline in closed sales. Single-family home sales dropped by a significant 19.7%, while condo sales decreased by 16.9%. This suggests a general slowdown in the market.

However, if we look at the most recent month, there's reason for optimism. Single-family home sales have actually increased by a notable 12.5% compared to the previous month, indicating a potential turnaround. On the other hand, condo sales remained steady during this time, indicating stability in this market segment.

August 2022 vs August 2023

The median sales price for single-family homes decreased slightly by 1.4% compared to last year, now sitting at $1,110,000. This suggests a softening in pricing for single-family homes. In contrast, condos have seen a 3.3% increase in their median sales price, now sitting at $515,000. This could be due to various reasons, such as increased demand for condos or a shift in the types of properties being sold.

Surge in Affordable Home Inventory and Exciting Growth in Kāne‘ohe and Leeward Regions

In August, there was a notable uptick in the availability of single-family homes priced at $799,999 and below, marking a substantial 33.8% increase when compared to the same period last year. This suggests growing opportunities for buyers in this more budget-friendly segment. This may be driven by increased demand for affordable housing options.

Additionally, the Kāne‘ohe and Leeward regions stood out as the frontrunners in this inventory surge, showcasing impressive year-over-year growth rates of 52.9% and 16.7%, respectively.

For condos, the inventory levels increased across most price points, with a significant concentration of active listings falling within the $300,000 to $699,999 range. This segment witnessed a 20.7% increase compared to the previous year. This also indicates a range of options for condo buyers, potentially catering to diverse budgetary needs.

Longer Time on the Market in Certain Regions for Real Estate Properties

Properties in both real estate markets maintained a steady pace of movement, although they took slightly longer to sell compared to the previous year, with a median time of 18 days on the market for both single-family homes and condos. Notably, this represents a five-day increase in the time it takes to sell a property.

When we zoom in on specific regions, we find interesting insights. Homes in the Leeward region and condos in the Waipahu region are experiencing the most prolonged time on the market compared to other neighborhoods. In these areas, the median days on the market stand at 50 days for homes in the Leeward region and 41 days for condos in the Waipahu region. This information could be valuable for prospective buyers and sellers, as it indicates that these areas may require a bit more patience in terms of property transactions.

Recent Trends in Real Estate Markets: A Closer Look at Contract Signings and Closed Sales

While year-over-year pending sales volume continues to show a decline in both real estate markets, there is a glimmer of hope as both markets have experienced a modest month-over-month increase. Specifically, contract signings have seen an encouraging upswing, with single-family homes witnessing an impressive 8.1% rise and condos following suit with a more modest 1.0% increase compared to the previous month. This uptick in contract signings may suggest growing buyer confidence or increased market activity.

However, it's crucial to emphasize that while contract signings reflect buyer interest and intent, closed sales provide a more significant measure of market health.  In this regard, there's an increase in closed sales for single-family homes. There have been 252 closed sales this month, a notable jump from the 224 recorded last month. This indicates a more active and successful closing of transactions in the single-family home segment.

On the other hand, closed sales for condos have remained relatively stable, with 422 closed sales, suggesting a consistent level of demand and successful transactions in this market segment. 

Neighborhood Statistics

Overall, the real estate landscape continues to evolve, with local market statistics varying significantly from one neighborhood to another. 

Please let me know if there are any queries you have regarding a particular neighborhood.

Should you have any Oahu real estate needs or inquiries, I am  here to assist.




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Whether you're looking for a stunning beachfront home or a cozy condo in Honolulu, feel free to reach out to Mike Hegazy II & team. We're dedicated to providing exceptional service and expertise to our clients.