Hawaii Housing, not all good news

Signs of cracks
The number of O'ahu single-family home and condominium sales peaked in 2005 at 12,607. Sales dropped 17 percent to 10,421 last year, and have continued to decline this year but at a slower pace.

Homes that a couple of years ago spent a median 15 to 30 days on the market before selling have spent a median 40 to 70 days on the market this year.

Inventory, which dropped to roughly 1,700 units in mid-2005, has been around 4,000 this year.

Median prices, meanwhile, began to wobble late last year after doubling since 2001. This year through April, the single-family home median price is up just 1 percent to $630,000. The year-to-date median condo price is $322,000, up almost 6 percent compared with a 15 percent rise last year.

It might be noted here that a number of higher end properties began showing up on the Hawaii market in January. Sales of any of these would push up the median price stats. This has to be factored in when accounting for median price rise. The actual price movement could very well have moved south.

LENDING CHALLENGES
Pasion said one of the bigger recent challenges has been dealing with tighter lending standards instilled in the fallout of several Mainland lenders struggling with defaults on exotic mortgages.

"It has a tremendous effect," she said. "I find that more challenging than selling. I have the product, but it's the mortgage companies now providing the pressure."

Severson, a former pro bodyboarder who's become a real-estate investor, said he's seen sellers price property relatively low to entice competing bids — a strategy that was rare at the top of the market. But many sellers, in his view, are still pricing property as though the boom isn't over.

"I think people are still living eight or 10 months ago and trying to gouge," he said.

The news isn’t all bad. The market slide has showed signs of slowing in Hawaii. This is true in other places of the country as well. I have seen signs however that would point to institutional investors picking up valuable properties in exclusive areas betting that the housing market will bounce. This of course would leave them with some fine properties acquired at bargain prices. That very well could happen, but I won’t hold my breath.
Vern