September 2023 Market Report
Many homeowners already have mortgages with lower interest rates, so they're not eager to sell their properties and face the higher interest rates prevalent in today's market. Instead, they're choosing to turn their properties into rentals instead of putting them up for sale.
Presently, there are fewer people actively looking to buy homes at the moment, which means there's less competition among buyers. However, savvy homebuyers are finding excellent opportunities in this market. They're taking advantage of lower purchase prices and benefiting from seller credits. To make the most of these opportunities, they're using strategies like highly leveraged loans, Adjustable Rate Mortgages (ARMs), and securing lender credits that sometimes result in negative points, even if it means accepting a slightly higher interest rate. The hope is that interest rates will decrease again in the future, allowing them to refinance into more stable loan options.
So, for those in the market for a new home, it's actually a favorable time to explore options. Reduced competition makes it easier to find a good deal, even with the current higher interest rates. This might be a temporary situation, as interest rates can change, so acting wisely now could lead to substantial savings in the long run.
The market for single-family homes in Oahu stayed strong with more than 200 homes being sold on average each month for the past year. However, last month, there was a slight decrease as 232 properties were sold, which is 16.5% less compared to the same time last year.
On the other hand, the condo market experienced a more significant drop. The average number of condo sales in the past 12 months fell below 400 for the first time since January 2021. In September of this year, only 376 condos were sold, representing a substantial 24.2% decline from the sales volume in September 2022.
The changing patterns in the housing market suggest a significant shift, particularly in the condo market, where there has been a noticeable drop in sales. This shift could reflect evolving preferences among buyers, potentially influenced by various factors like lifestyle changes, economic circumstances, or a desire for the added space and privacy provided by single-family homes.
One possible reason behind the decrease in condo sales is that in September, the median sales price for single-family homes dropped by 4.5% compared to the previous year, settling at $1,050,000 by the end of the month. In contrast, condos experienced a 6.0% year-over-year increase, reaching a median sales price of $532,500. This disparity in pricing could have contributed to the decrease in condo sales, as buyers might have perceived single-family homes as a more valuable investment option, considering the apparent difference in pricing trends between the two property types.
In September, homes that were sold typically took about three weeks to find a buyer. Single-family homes had a median time on the market of 20 days, an increase from 18 days in September 2022, while condos typically spent 21 days on the market, up from just 14 days in September 2022 before being sold.
An interesting observation is that almost all single-family homes, roughly 99%, were sold at the full asking price, which is slightly lower compared to last month's 99.2%. This indicates that buyers are still willing to meet the sellers' expectations despite the prevailing high-interest rate environment. Moreover, 38% of single-family homes were sold for more than the initial asking price, suggesting competitive bidding among buyers.
On the other hand, almost all condo sales, approximately 98.8%, in September 2023 managed to achieve the full asking price, a slight decrease from 100% during the same month last year. Moreover, 20% of condo sales closed above the original asking price, indicating that condos continue to be in demand.
The Hawaiian real estate market is revealing intriguing dynamics within both the single-family home and condo sectors. Notably, the $700,000 to $999,999 price range saw a robust 36% share of single-family home sales for the month. This trend was particularly concentrated in the Ewa Plain region, highlighting a promising market trajectory specific to this area.
On the other hand, the condo market portrayed a more interesting picture. Although there was an overall surge in sales at the higher price points, the more budget-friendly price ranges experienced a downturn. Specifically, the $900,000 to $1,999,999 price range witnessed a remarkable 31.0% increase in sales, indicative of an upsurge in demand for condos at this price point.
In contrast, the condo sales in the $200,000 to $599,999 price range faced a significant drop, declining by a substantial 30.2%. Additionally, during the third quarter, the $900,000 and above price range observed a 3.9% increase in condo sales, while sales in the $300,000 to $400,000 price range decreased by 25.6%. These market shifts are reflective of evolving buyer preferences and changing economic conditions.
The number of new houses and condos up for sale was lower compared to last year. For single-family homes, it went down by 7.6%, and for condos, it fell by 14.1%.
Looking at the overall number of homes available, things were a bit mixed. The amount of single-family homes up for sale was a little less compared to last year, dropping by 5.9%. On the other hand, the number of condos for sale went up by 4.6%.
In some areas like the North Shore and Ewa Plain, there were fewer homes available, with drops of 46.7% and 17.6%, respectively. However, in Kane'ohe, there were 25% more single-family homes for sale, which means there were 10 more homes for sale compared to last year. When it comes to condos, most areas had more condos available, except for places like Hawai'i Kai, North Shore, and Ewa Plain, where there were only a few condos available at the end of September.
So what does this mean for buyers and sellers?
For buyers, it's important to recognize that the lower number of new listings might mean less variety to choose from, especially in the condo market where the drop was significant. This could lead to increased competition for available properties, potentially driving prices up.
For sellers, in areas where the inventory has decreased, such as the North Shore and Ewa Plain, it could be a favorable situation. Fewer options might mean your property could stand out more, potentially resulting in quicker sales or even better prices.
On the other hand, if you're selling a condo in a region with increased inventory, it's important to be mindful of the competition. You might need to make your property more appealing or price it competitively to attract potential buyers.
In September 2023, the total sales for single-family homes were 232, marking a decrease of 17% from the 278 sales recorded in September 2022. Additionally, the median prices for these single-family homes witnessed a decline of 5% compared to the previous year. However, condos experienced a steeper decline of 24% in sales, with 376 closed sales in September 2023 as opposed to 496 in September 2022. Notably, despite the decrease in sales, condos saw a 6% increase in median prices during this period.
It is crucial to recognize that each neighborhood in Oahu may exhibit unique trends and dynamics within the real estate market. Should you have any Oahu real estate needs or inquiries, I am here to assist.
The spring season didn't start off strong. In March, sales of single-family homes went down by 2.5% compared to last year, and condo sales dropped by 22.5%. The media… Read more
In this blog post, we'll explore some key considerations for retirees looking to relocate to Oahu and find their dream retirement home in paradise.
In this blog post, we will explore the distinct aspects of Hawaii's real estate laws, covering topics such as land tenure, leasehold properties, and the essential role… Read more
Potential buyers are advised to start their search now and secure a property while there is less competition, with the option to refinance later. On the other hand, se… Read more
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.
