Hawaii’s hottest summer and coldest winter coincide with all-time highs in Oahu median home prices. Maybe it’s time we talk about the weather.

Research suggests that Hawaii's unusual temperatures last year may have been a factor in driving up Oahu home prices.

Last September, two Hawaii cities reported the highest summer temperatures in over 100 years. "It really is significantly warmer than what we typically have," said meteorologist Chris Brenchley. He added that, once humidity was factored in, "We started to see those heat index values in the high 90's, even in the triple digits."

That month, the median home price in Honolulu reached a historical new high of $730K.

Then in January of 2016, the National Weather Service reported the lowest temperature recorded that day in Honolulu in the last 122 years. That month, the median home price – after a slight dip at the end of 2015 – reached a new all-time high of $733K.

Though radical temperature shifts may be common on the U.S. mainland from season to season, most long-time Hawaii residents were caught off-guard.

“Fluctuations in weather patterns have been linked to increases in consumer spending.” –Vadim Krasko, economist

Economically speaking, increased spending in unusual weather is a necessity. Krasko’s research simply connects the dots between unusual weather and higher energy bills, since consumers “need to balance the temperature differences from weather changes.”

Emotionally speaking, increased spending in unusual weather is a way to cope with unexpected discomfort. In an article published in the Journal of Retailing and Consumer Services, researchers linked the influence of weather on mood and, in turn, the influence of mood on spending. Negative affect (feeling bad) was shown to increase a person’s willingness to spend more money.

So research suggests that the unusually uncomfortable temperatures in Hawaii may have motivated home buyers to spend more on homes.

On the other hand, these historic highs may simply be characteristic of the seasonal ebb and flow of median home prices on the island of Oahu. 

In my previous posts, I’ve tracked median price peaks on Oahu over the last five years. From 2011-2014, I observed a pretty consistent pattern:

1. High in May/June
2. Dip in July/August 
3. High in November/December

The pattern seemed to be broken in 2015 when the median went up in autumn instead of down, as was characteristic in previous years. I interpreted this as an elongation of the ebb/flow wavelength, predicting that the highs and lows would still occur in sequence, just on delay.

And so it went. The Oahu median home rise/fall pattern was delayed:

1. High in September
2. Dip in December
3. High in January

 The chart below shows the pattern from 2011-2014 and how it shifted in 2015.

Were Hawaii’s hottest summer and coldest winter the primary cause for Oahu median home values reaching record highs? Probably not. Due to the strong demand for housing in Hawaii, prices were bound to go up anyway. Also, interest rates did not suddenly rise despite widespread anticipation. This must have been a huge encouragement to borrowers. 

Still, it’s hard to ignore the coinciding of two seemingly unrelated statistics: peak home prices and the weather. Taking into consideration the general impact weather has on consumers both economically and emotionally, it’s not a stretch to say that our record-setting weather influenced record-setting home prices.

Would Hawaii real estate be so expensive if not for foreign investors?

Probably not. Consider these facts:

The average sale price of homes sold to foreign buyers from 2008 to 2015 was $785,604 and the average sales price for mainlanders was $630,390. By comparison, the average sale price of homes sold to local buyers over the same period was $478,189.

So foreign buyers on average have spent 65% more than local buyers, while U.S. Mainland buyers have spent 32% more than local buyers. Also worthy of note is the quantity of homes being acquired: more than a quarter of homes sold in Hawaii are purchased by non-Hawaii residents. On neighbor islands, nearly half the homes are swept up by out-of-state investors. 

These and other findings were recently reported in the first study of its kind by DBEDT.

Is this good news or bad news?

Well, it depends on who you are. If you are an out-of-state investor with lots of money, you probably won’t have much trouble purchasing your own piece of paradise.

But for local non-homeowners (45% of household earners in Hawaii), this news can be very upsetting. High demand makes it harder for renters to attain the benefits of home ownership.

High demand for real estate is good for homeowners.

For homeowners (55% of household earners in Hawaii), high demand for housing is great news. Since the lowest point of the recent recession, Oahu real estate values have gone up 35%. To put it in practical terms, if you bought a house in January of 2009 for $500K, it would be worth $675K today, having gained $175K in value. Add the $65K or so you would have paid down on your mortgage and you’re looking at $240,000 in equity over 7 years. 

High demand for real estate is good for would-be homeowners 

If you live in Hawaii or are moving here, you may be able to leverage the strength of our market to your advantage. But many who are able to purchase Hawaii real estate choose not to. If you're on the fence, consider this: Twenty years ago, a $1000/mo mortgage payment was a lot. But anyone who bought 20 years ago is the envy of today’s buyers, since their mortgage payments are still $1000/mo after 20 years! Rents go up but mortgage payments stay the same. Yes, real estate is expensive in Hawaii, but it is more expensive because it’s more valuable. 

“People love Hawaii, and they love to invest in Hawaii,” said Eugene Tian, state economist. “Out-of-state investments make our housing demand very strong.”

New loan regulations may have had a negative impact on the U.S. real estate market, but national figures differ noticeably from the very resilient Oahu real estate market.

Reuters reported last month that “U.S. home resales posted their sharpest drop in five years in November,” a 10.5% drop from October 2015. While some may see this is a potential warning sign for the health of the U.S. economy (especially after last week’s stock market plunge), NAR economist Lawrence Yun suggests that new regulations on paperwork for home purchases may have driven the decline.

What new regulations?

If you’ve been looking into real estate recently, you may have seen the acronym T.R.I.D. TILA-RESPA Integrated Disclosure Rule Implementation (TRID) went into effect on October 3. In a nutshell, these changes are meant to benefit you (buyers and sellers) by simplifying forms and increasing accountability for lenders. Imagine a new set of procedures being handed out to an entire industry sector. That’s what lenders experienced in October. Such a broad, sweeping change was bound to have an effect on speed and overall efficiency.

Has TRID had any impact on Oahu real estate?

I believe so, but since comprehensive data is still forthcoming, it may be difficult to see right now. What iseasy to see is what has increased, or at least remained steady. The health of the market in our state is shown in 4 categories. As displayed in the infographic below, numbers are up from last year in: 

1.     Median Sales Price
2.     Number of New Listings
3.     Number of Active Listings
4.     Number of Homes Sold

The December median price for single family homes (SFH) on Oahu was $700K. This is nearly 3x the national average (which is one huge difference between the Oahu market and U.S.); however, this is a decrease from the year’s high of $730K in September. Why did the median drop? Does this have long-term implications? Is the market starting to adjust?

Mysterious absence of the “winter peak”

In my previous posts, I charted market trends over the last 5 years. From 2011-2014, median prices in Hawaii have had a 1) summer peak, 2) an autumn dip and 3) a winter peak. In 3 of those 4 years, the winter peak surpassed the summer peak – that is, median home values were higher in the winter than in the summer. 

That was not the case this year. Contrary to the predictable rise/fall/rise of median prices in previous years, there was no winter peak. In fact, when the median should have dropped in autumn, it rose … to an all time high of $730K. Then, uncharacteristic of previous years, it declined incrementally as the year came to a close: $720K (Oct), $715K (Nov), $700K (Dec).

Does this mean that home values will continue to decrease? I believe the median will rise again in the next couple months and here’s why:

Initially, when I saw an autumn high (instead of a dip) and a winter dip (instead of a peak, I thought the patterns had somehow inverted. Yet, other stats saw almost no change. On average:

1.     Sellers were still getting 98% of list price,
2.     Homes were still selling in 20 days
3.     And, just as in previous years, the overall number of homes available dropped in the winter.

Mysterious increase of pending sales

But one stat was different: the number of pending sales jumped up 10% in December. That increase may not seem like much … until you compare it to the next highest increase in the last five years of about 1%.

What does this mean? Homes are still being sold on Oahu in greater quantities and higher numbers than before. They are just taking a little longer to close.

If NAR economist Lawrence Yun is correct, what seemed to be an inversion of rise/fall pattern may prove instead to be an elongation of the wavelength, caused by a delay in closings.

Conclusions

Does this mean we need to plan for longer escrows from now on? Not necessarily. Since lenders and escrow companies are getting accustomed to a new set of procedures, timelines should be back to normal once organizations find their flow again.

In closing, the Oahu real estate is not merely a microcosm of the US market, nor is it like that of any other state. Properties here are more valuable, less available and very diverse. There are still great opportunities for selling, buying, owning and/or investing in real estate here on Oahu. Team up with a Oahu real estate agent who understands this unique and thriving market. Call Team Aloha Tony today! 

Hawaii Kai is known for its great location on the south-east corner of Oahu, easy access to the ocean, and the quality of life. You can spend between $500K, up to just under $14 million on a home here. Here is a brief overview of Hawaii Kai.

In 1961, Henry J. Kaiser entered into a long term land lease with Bishop Estate, that would allow him to develop a large part of east Oahu (Hawaii Kai) into residential housing tracts and commercial properties. He had begun dredging, widening and deepening the Kuapa pond, which would later become canals, so that homes could be built along the waterways and boats could travel through them as well. Hawaii Kai was Oahu's very first planned community. Ironically, Kaiser had moved to Hawaii just 5 years prior, to retire. He had his own empire on the mainland, holding 29 different companies. He obviously had a vision that wouldn't die until he brought it to fruition.

Cynic's of Kaiser's project called Hawaii Kai "Kaiser's Folly" as they began selling homes for only $18,750 and lost a lot of money on each one. In the beginning, local folks were very skeptical buying a home from Kaiser. So he brought in local and mainland subcontractors that buyers were more familiar with. After that, the homes started selling like crazy!

In the end, Kaiser didn't make much money on the Hawaii Kai development. "The only people who made money are the homeowners themselves. Property values have gone through the roof. But I think Mr. Kaiser would be perfectly happy with that fact." Tim Yee (former corporate vice president of real estate at Kaiser Aluminum) told Hawaii Business Magazine in June 2005

There is a great and glorious neighborhood culture in Hawaii Kai. The more you live here, the more you feel, see, and sense it. It's wonderful! I love that I cannot go anywhere in Hawaii Kai without seeing someone I know who wants to come over and 'talk story' with me. It's Aloha at it's finest folks! Some people think that because Hawaii Kai is only 50'ish years old, that it doesn't' have as much history as some other area's on the island....not true! Hawaii Kai is a melting pot of cultures and diverse combinations of families living together.

-Chelsea Pferschy RS# 76072 (808) 754-6000

Lalea in Hawaii Kai is a town home complex located at the end of Hawaii Kai Dr, just after you've passed the Hawaii Kai post office. It is a 29 building complex with 293 units within it. There are 1, 2, 3, and 4 bedroom units which creates a large range of buyers that may consist of singles, couples, and families. Units range between 750-1500 sq ft. Pets are OK (please verify). They were built in 4 stages that each took a year to complete between 1996-1999 and built by Castle & Cook Homes Hi.

There are many things that make Lalea standout in the condo/townhome scene in Hawaii Kai: Their private park, heated pool, clubhouse and lots of private streets for walking with the family and pets. And, with all of the necessities very close by (Costco, Safeway, Ross, City Mill, Koko Head Theatres, and many restaurants and boutique shops), homeowners are able to spend more time enjoying the community.

 Lalea at Hawaii Kai is zoned for: Hahaione Elementary, Niu Valley Middle, and Kaiser High. Hahaione is a blue Ribbon school and also in International Baccalaureate school as well. Please check with current zoning's as these may change as time passes. The units within Lalea rarely stay on the market for very long as this is a highly coveted neighborhood in Hawaii Kai. It's affordable price point, friendly atmosphere, and many amenities within, make this a popular complex to buy in to.

Currently the owner occupancy rate is approx. 75%, and there is very low turnover as people tend to enjoy living here.

Call one of us at Alohatony.com if you'd like to be represented as we represent both buyers and sellers with care. We have many years of real estate experience and go above and beyond to provide our clients with the best service possible.

by: Chelsea Pferschy RS# 76072

     As the summer selling season draws to a close and we start to approach the holiday season, I wanted to give you an idea of our local market and the trends that are happening now compared to last year.

     For single family homes and condo's, inventory is down in most area's which will tend to drive up prices. When X number of buyers are looking at Z number of houses, and X is greater than Z, that means bidding wars ensue (from buyers) which always end up pushing sale prices higher.

     For single family homes, median sales prices went up this year 6.45% compared to the median sales price in 2014. The average days on market went up 3 days, to 25 days on market, compared to last years 22 DOM.

     For condominium/town homes, the median sales price also went up 3.3% compared to last years prices.The average days on market for condo's went down this year to 25.5 days on market, compared to last years 26.4 DOM. Not a huge change, but notable considering the trend these past few years. With single family homes becoming increasingly more expensive, condo's/town homes are becoming a more affordable option for families and investors.

     As we've been saying here at alohatony.com, sales prices continue to rise in single family homes, and are continuing on the approximately 6% per year rise. And also with condo/town homes rising again with 3.3% this year. The Hawaii real estate economy continues to prove it's strength and stability with these figures. This proves again that investing in Hawaii (Oahu) real estate is a great choice.

Call us today to get personal representation in the purchase (or sale) of your home.

By: Chelsea Pferschy RS# 76072 (808) 754-6000 Team Aloha Tony-Hawaii Homes International Statistical information provided by the Honolulu Board of Realtors-HBR

        If you have a boat or you'd just like to live on the water, then you've definitely considered Hawaii Kai as your next home. Hawaii Kai is located in the south eastern corner of Oahu. It's considered Honolulu, but as Honolulu is such a broad area we all know it as Hawaii Kai. 

       As you ponder your options, here are a few things to consider. A town home/condo may be the best option for you. Unless you want a single family home, then you'll need at least $1,500,000 for marina front in Hawaii Kai.

     The prices for a marina front condo/TH in Hawaii Kai range from $380,000 for a 1 bedroom in the Esplanade, to $1,150,000 for a 3 bedroom town home on Koko Isle. Marina fee's are $400/year but some maintenance fees cover this. If you have a pet(s), there are a few places that accommodate. Call one of us at alohatony.com to get a custom MLS search for properties that will allow pets.

    Maybe you have a boat but soon realize that the marina front life doesn't' fit within your budget. Prices for a boat slip at Koko Marina start at $300/month for a 26 foot slip. With miles of canal plus Maunalua bay, there's plenty of places to take your boat to. Hawaii Kai rates #9 in all of Hawaii for neighborhood's to live in. It ranks high in all categories except affordability. It's a beautiful place to live and work, with parks and public school's that also rank high in Hawaii. Call us today for all of your Hawaii/Oahu real estate information.

By: Chelsea Pferschy RS# 76072 (808) 754-6000 

Homes on Oahu sell for higher at this time of year than any other, which means now may be the ideal time to sell your home. If you’ve wanted to list your property but had trouble deciding when, here is some valuable information to consider. 

Median home prices on Oahu have peaked in Nov/Dec in 3 of the last 4 years. Since the typical escrow period here is 45 days, the sales figures recorded in Nov/Dec reflect offers that were accepted in Sept/Oct. Historically, offers made in Sept/Oct are higher than the rest of the year. Check out the trends in the chart, below.

Oahu Median Home Prices By Season

What’s behind the spike in median price during the winter? While there are many factors, one trend that seems to be consistent is the decrease in inventory between August and September. Fewer homes were on the market in September than August every year for the last four years. Simple economics says a decrease in inventory paired with steady (or increasing) demand will result in higher prices. 

Wouldn't you rather sell your home with less competition?

Currently, homes for sale on Oahu stay on the market for an average of 20 days before an accepted offer. Add a 45-day escrow period to your calendar, and you may be able to go from listing to closing in 65 days, give or take a week or two. To sum it up: if you decide to sell your home today, your sale could line up perfectly with that winter swell. 

    With it's amazing location just in front of Koko Head crater in Hawaii Kai, the neighborhood of Koko Head Terrace makes coming home a beautiful thing.

    The homes in Koko Head Terrace were all originally built between 1965-1971 and were constructed by using the single wall method of construction. Single wall construction is quite common here (and in other tropical regions) as we do not need a method of heating for homes, which makes insulation unnecessary. A majority of traditional Hawaiian homes were built using single wall construction. With the homes having been built with single wall construction, they were all originally single story. When you see a 2 story home in Koko Head Terrace, it's safe to say that they had to have it re-engineered and framed in double wall in order to support the structure above.

    The homes all range between (approximately) 1000-1800 sqft. With an exception to those that have been enlarged and remodeled. Land square footage is between approx. 5000-6000 sq ft., also with the exception of a few larger lots.

    Some Realtors claim that Koko Head Terrace is an "entry level" area within Hawaii Kai for consumers to buy a single family home, but with prices this year (2015) ranging from $720K-$1.250M, I'm not sure that's so true anymore. Depending on how renovated a home is prices per sq ft are about $373-$644.....PER SQUARE FOOT!!! But, there's a reason that these home prices continually go up...living in Hawaii Kai, the beauty, the suburban feel, the convenience of shopping, the great public school's, the variety of outdoor activities and easy proximity to nice beaches helps boost these prices each year.

    Call team Aloha Tony if you would like personal representation on your next home purchase. We would love to help you!

-Chelsea Pferschy RS# 76072

     We recently sold a home in Makakilo-Anhuea, within the Palehua Home Owners Association. Anuhea is a subdivision developed by DR Horton-Schuler Homes in 2005. The homes are very well built with steel frames and nice floor plans. This neighborhood consists of 109 homes that are a CPR. CPR is short for Condo property regime. But these are all detached, single family homes. The CPR refers to the way that the land was split up by the developer.

    The floor plans are all very open and have nice sized bedrooms. There are 4 different floor plans with many variations of them all. They are all 3-4 bedroom, 2, 2.5 or 3 bathroom and range from 1285-1817 sq ft.

    The homes have a traditional exterior elevation and all have nice vinyl picket fencing around the side and backyards. Some of the homes boast views of the ocean, town, mountains and some Makakilo gully views. They are maintained by a great association that keeps very low maintenance fee's and requires home owners to keep up exterior appearances to maintain good home values. The homes (right now) range in price from $615K-$730K depending on size of the house and lot.

    Makakilo itself is considered Kapolei, but is divided from Kapolei (proper) by the freeway. One of the BIG draws to Makakilo are the wonderful breezes that sweep over the Makakilo hillside. They cool off the homes on hot summer days and nights. Makakilo is just a quick trip right onto the freeway on-ramp and many restaurants, grocery and clothing stores. If you would like more information about Makakilo and its subdivisions, contact one of us at Team Aloha Tony. We would love to help you! -Chelsea Pferschy RS#76072