Market Snapshot
Recently, I have noticed a resurgence of multiple offers on listings, reminiscent of the market in 2022. However, there's also been a significant number of escrow cancellations, indicating that today's buyers can be quite indecisive. In the past, going into escrow felt like winning the lottery, but now it seems buyers easily back out at the smallest discomfort, making the process more uncertain.
For sellers, it's crucial to identify buyers who are genuinely committed to closing the deal rather than simply offering the highest amount in the current market. On the other hand, buyers are becoming more accepting of higher interest rates, with 6% becoming the new norm. They are willing to endure it for now, hopeful that rates will decrease in the future, allowing them to refinance.
Market Overview
The Oahu real estate market has recently witnessed a significant decline in median sales prices for both single-family homes and condos during the month of June, as reported by the Honolulu Board of REALTORS®. In comparison to the previous year, the median sales price experienced a notable drop of 4.5%. Specifically, the median sales price for single-family homes was recorded at $1,050,000, while condos had a median sales price of $510,000.
Alongside the decline in prices, there has been a substantial decrease in the overall sales volume within the market. Sales of single-family homes experienced a significant drop of 30.5% compared to the same period last year, while condo sales saw a decline of 24.9%. These statistics indicate a slowdown in market activity, with fewer properties being sold during this time.
However, it's important to note that despite these declines, the Honolulu housing market has maintained a relatively fast pace. On average, properties are entering into contracts in just over two weeks, highlighting the continued competitiveness and activity within the market. This suggests that buyers are actively engaging with properties and swiftly making offers within a relatively short time frame.
Buyers may be capitalizing on the current market conditions to secure properties at lower prices, while sellers may need to adjust their pricing strategies to remain competitive in an environment with an increased active inventory.
June 2022 vs June 2023
Impact of Rising Mortgage Rates on Contract Signings in the Housing Market
The housing market has undergone a notable change in pending sales, with contract signings showing a decline when compared to both the previous year and the previous month. This decline can be attributed to the significant increase in mortgage interest rates that occurred in June. As mortgage rates soared, potential buyers have become more cautious or financially constrained, resulting in a decrease in the number of contracts being signed.
During the month of June, the total number of contract signings stood at 231 for single-family homes and 415 for condos. These figures reflect the number of buyers who proceeded with signing contracts to purchase these respective types of properties.
It is important for sellers to be mindful of the current market conditions. In today's market, it's not just about accepting the highest offer. Sellers should also consider the likelihood of the buyer to successfully close the deal. This means evaluating the buyer's financial situation and their ability to secure a mortgage. By carefully selecting a buyer who is more likely to close the transaction, sellers can increase their chances of a successful sale.
Surging Inventory, Seller Motivation and Buyer Resilience in the Face of Mortgage Rate Hikes
In June of this year, there was a notable increase in active inventory in both the single-family homes and condos markets compared to the same period last year. By the end of June 2023, there were 605 active single-family homes, marking a 14.8% increase from the previous year, and 1,159 active condos, showing a 16.1% increase from last year.
Despite the rise in mortgage rates that affect prospective buyers, sellers in the current real estate market are still motivated to sell their properties. Furthermore, buyers are gradually accepting 6% as the new normal for interest rates and are willing to bear this rate for the time being, hoping for a decrease in the future that would allow them to refinance their mortgages at a more favorable rate.
Neighborhood Statistics
In June 2023, the real estate market on Oahu remained stable. Home prices are stable, and slightly increasing, and this trend is projected to continue into next year.
Prospective homebuyers are embracing higher mortgage rates, leveraging the opportunity to collaborate with experienced lenders who possess extensive knowledge of the market. These lenders offer flexible borrowing options, allowing buyers to secure a financing solution that aligns with their long-term goals.
The local market statistics can vary significantly from one neighborhood to another, so it's crucial to keep that in mind. 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.
