Oahu's 2017 housing market finished strong with gains in both condominium and single-family home sales and median prices, and experts from the real estate industry expect the momentum to continue this year, but possibly at a slower pace.
As many as 361 single-family homes traded hands in December — up 5.9 percent from the same month in 2016. The median price paid for a single-family home in December rose 2.3 percent to $750,000 from December 2016's $730,000. The median price refers to the midpoint of the market, which means that in December 2017 half of Oahu homes sold for more than $750,000 and half sold for less.
The median price paid for a condominium in December rose to $405,000, up 3.8 percent from the same month in 2016, when the median was $390,000. While December condominium sales fell 12.2 percent to 461, the decline wasn't enough to mar the year-end market.
It was a brisk market in December, when the median time that it took to sell a single-family home was 20 days and 18 days for a condominium.
"The 12 percent decrease in condominium sales last month is a bit misleading, since the market experienced a nearly 24 percent spike in December 2016; overall condo sales were still very robust in December 2017," said Sue Ann Lee, Honolulu Board of Realtors president, in a statement.
For the full year 2017, 3,908 single-family homes sold, up 6.3 percent from full year 2016. At the same time, the 2017 full-year median sales price rose 2.7 percent to $755,000 from $735,000 a year ago. In 2017, buyers purchased 5,824 condominiums, a 6.9 percent rise from 2016. The median price for a condominium in 2017 rose 3.8 percent to $405,000 from 2016's $390,000 median.
The market was strong throughout the year, particularly in June, July and September. The median price of single-family homes hit a high of $795,000 in June, which was such a robust month that days on the market averaged just 12 for single-family homes and 13 for condominiums. The median price for condominiums reached a record $425,000 in July and September.
Air Force Staff Sgt. Brandon LaFayette and his wife, Erika, who bought twice and sold once since 2016, are proof that it's been a frenetic market. A military family whose last duty station was in Okinawa, the LaFayettes were constrained by sticker shock and limited buying power when they bought their first Ewa Beach condominium in 2016, a two-bedroom, two-bath unit.
But a year and two months later, the property had appreciated enough that the couple were able to trade up to a three-bedroom, three-bathroom condominium to accommodate 7-year-old Sebastian and 3-year-old Fiona.
"We listed it in September and we made good money. We were able to do some upgrades in our new home and pay off a vehicle," Erika LaFayette said.
Their real estate agent, Shannon Severance, who was Remax Honolulu's overall top producer in 2017, said the couple had four offers, two above asking price, within a week of their September listing and, despite some tough negotiating, were in their new home by Nov. 7.
"The LaFayettes are a classic example of this market," Severance said. "There's lots of strong buyer demand, especially on the west side where everything is newer, lots are larger and homes have central air conditioning. My phone has been ringing off the hook in 2018 and I think it will continue. Unemployment is low, people are feeling good about the economy, and interest rates are still near historic lows."
John Riggins, owner of John Riggins Real Estate, agrees Oahu's real estate market will remain strong in 2018. However, he thinks December's slowdown in condominium sales is indicative that the market may stabilize somewhat due to high prices, rising interest rates, and the possibility of negative implications from the new tax law, which limits mortgage interest write-offs to loans up to $750,000.
"Local buyers are still in the market, but it's getting more and more difficult for them to buy," Riggins said.
Stephany Sofos, a commercial and residential real estate expert, maintains this year's market will be more favorable to local buyers, who have had to contend with four years of foreign-investment-fueled frenzy.
"People have to understand that Hawaii real estate is now an international commodity. Locals aren't just competing with the buyer from Hilo or Kailua. They are dealing with people in Hong Kong, Shanghai, Wellington, Sydney, London — basically the whole world," Sofos said. "I have clients that have offered full price within 24 hours of a listing and already they are competing with three or four other offers. I just did a $2.6 million cash offer and we are only in the backup position."
Sofos said she thinks a strong stock market will encourage some of the investors who have been scooping up Hawaii real estate to put their money into the equity markets, creating greater opportunities for local buyers, who don't have full-cash capabilities.
"It's all good. We needed a breather. It's like your waistline: If you keep gaining 6 percent to 12 percent a year, you'll pop," she said.
