Oahu Buyers & Sellers Markets Details – In this month’s Hawaii Damon Newsletter we will look at several East Oahu neighborhoods while giving a general overview of the market status in the rest of Oahu. If you are in the market for a home or considering selling your home in the near future, this month’s main topic is a must read!
Am I selling in a Sellers’ Market and buying in a Buyers’ Market? Or, vice versa? – Whether you are a Buyer or Seller or both, this is an extremely important piece of information to know. Selling for top dollar in a Sellers’ Market and buying for the best price possible in a Buyers’ Market is the best possible scenario while selling in a competitive Buyers’ Market and buying in a Sellers’ Market would be less favorable with a wide range of scenarios in between. Buyers’ or Sellers’ Market status should, for the most part, dictate buying or selling strategy. In previous Hawaii Damon Newsletters we reviewed strategy so will not delve too much into that topic this month. However, the links to those previous newsletters now posted on the blog section of the Hawaii Damon website and can be found here: Market Strategies for Buyers and Market Strategies for Sellers. Please check them out. For this month we will simply focus on identifying the actual Buyers’ or Sellers’ Markets themselves on Oahu with some actual data for several neighborhoods. I’ll make it easy to understand and if the neighborhood you are (interested) in is not reviewed this time please do not hesitate to contact me here and I can get you a full analysis on your requested neighborhood – usually by the next day.
Buyers’ & Sellers’ Markets 101, How are they defined?The usual method is to look at inventories of homes on the market. Assuming no change in the monthly sales of homes in a given neighborhood, how many months would it take to sell the inventory of homes currently on the market? Basically, if the remaining inventory is less than 5 months then it is a Sellers’ Market (Seller, for the most part, has the upper-hand) and if it is more than 6 months then it is a Buyers’ Market (buyer, for the most part, has the upper-hand). The Goldilocks zone (market not too hot nor too cold) is considered to be 5 to 6 months of inventory – balanced where neither the Sellers nor the Buyers have the upper-hand. Let’s now look at several areas and neighborhoods:
General Market Status Outside of East Oahu – Besides some areas of Kailua (Lanikai etc.) and North Shore most of the Luxury Home neighborhoods (homes over $1.9M and condos over $700K) are in East Oahu. Outside of East Oahu where most of the median neighborhoods are – median price on Oahu in September was $760K and $425K respectively for homes and condos – is a hot Seller’s market with inventories in the 2 to 3 months range with appreciating prices. In the category just below Luxury Home/Condo from $1.1M to $1.9M which not only covers many other neighborhoods in East Oahu but also all over Oahu – we are just in the Goldilocks zone at 5.9 months of inventory.
Specific neighborhoods can vary so, again, please do not hesitate to contact me for a full analysis of the neighborhood you are (interested) in. Here is a graphic showing the inventories on Oahu broken down by 8 price categories (click to expand):
(courtesy of the Honolulu Board of Realtors)
Here is the one for Condos:(click to expand):(courtesy of the Honolulu Board of Realtors)
Now that we know the Market Status of most of Oahu outside of Luxury Home areas and the category just below ($1.1M to $1.9M) which is in the “Goldilocks” zone – let’s now specifically have a look at a few of the most popular East Oahu Luxury Home neighborhoods:
Hawaii Loa Ridge – After Kahala this would be next renown luxury home neighborhood boasting of some of the most spectacular ocean, Diamond & Koko Heads views on Oahu. Currently it has 12.6 months of inventory. The actual data and a CMA (comparative market analysis) for Hawaii Loa Ridge can be found here.
Portlock & Koko Kai – After Kahala and Hawaii Loa this would be the number 3 Luxury Home area on Oahu located in Hawaii Kai offering luxury with beautiful ocean views from many of the homes. Currently it has 15 months of inventory. The actual data and a CMA (comparative market analysis) for Portlock & Koko Kai can be found here.
Napali Haweo – This is the newest luxury home neighborhood on Oahu which some say is the most well planned with wide streets and a HOA (home owners’ association) with fairly strict building and upkeep guidelines (strict on one hand but on the other less worry of a neighbor bringing down your home value!). Some of the homes, in price, dip just below the luxury home level ($1.9M). Currently there are 9 months of inventory. The actual data and a CMA (comparative market analysis) for Napali Haweo can be found here.
Lanikai – This is the jewel of the Windward side of Oahu. Smaller surf on the beautiful beaches nearby make this neighborhood a must live spot for the rich and sometimes famous! Currently it has 8.8 months of inventory. The actual data and a CMA for Lanikai can be found here.
Waialae Iki – This beautiful neighborhood on the adjacent ridge to the West of Hawaii Loa – also with beautiful ocean views – straddles the price range between luxury home and just one level below (in the last 12 months about 25% of the homes sold above $1.9M and 75% below). Currently it has 7.5 months of inventory, just in Buyer’s Market territory. What’s interesting though is if you eliminate all homes over $1.9M from the data (25%) we are then back down to the “Goldilocks” inventory level! The actual data and a CMA for Waialae Iki can be found here.
Maunalani Heights – Although this neighborhood is not quite in the Luxury Home range, in general, it falls into the category just below ($1.1M to $1.9M). The homes on this ridge and in this older neighborhood also boast some of the best (and unique!) ocean, Diamond and Koko Head views. Currently it has 7.2 months of inventory, just in Buyer’s Market territory. What’s interesting though is if you eliminate all homes over $1.9M from the data (there are not that many) we are then back down to 3.7 months of inventory, Sellers’ Market! The actual data and a CMA for Lanikai can be found here.
Gold Coast – Finally, let’s look at one of Oahu’s most prestigious luxury condo areas, the Gold Coast between Diamond Head and Waikiki which boasts some of the most expensive real estate per square foot on the planet. Currently it has 9.4 months of inventory putting it in Buyer’s Market territory. The actual data and a CMA for the Gold Coast can be found here (fee simple properties only).
The Take Away – The lines have really been drawn between Sellers’ & Buyers’ Real Estate Markets on Oahu. Above $1.9M we are in Buyers’ Market territory. At one level below luxury homes ($1.1M to $1.9M) we are in the “Goldilocks” zone – “not too hot, not too cold but just right” at 5 to 6 months of inventory. All the next levels down including the median ($760,000) are steaming Sellers’ Markets. As mentioned in previous Hawaii Damon Newsletters, now would be a great time to consider trading up from a median neighborhood to a luxury home neighborhood. Trading up from a Sellers’ Market to a Buyers’ Market is as good as it gets. For those on the sidelines perhaps considering investing in the Luxury Home/Condo market, please take note that we are starting to see inventories tighten up just a little now above the $1.9M level (though still squarely in Buyers’ Market territory). For Buyers facing a steamy median market please see my Market Strategies for Buyers. For Sellers facing a cool Luxury Home market please see my Market Strategies for Sellers.
Conclusion – In conclusion I think it would first be appropriate to talk about reasons why the Luxury Home market above $1.9M has been having a Buyers’ Market inventory of homes for such a prolonged period – all in an expanding economy. I believe here are two very good reasons:
1) Kakaako Condos – Although there will always be a very large % of home owners that will always want to own their own piece of dirt and a single family home, there is a growing % of families that are opting for the low maintenance life that luxury condos can afford. There is no doubt Kakaako has been taking a bite out of the Luxury Home (single family) market. However, as the inventory of luxury condos in Kakaako become depleted the pendulum could swing back to single family luxury homes. I talk about these subjects in previous newsletters, Air vs. Dirt and Kakaako Rising.
2) Stock Market – It has been on a roll reaching unprecedented P/E (price to earnings) ratios. It has to some degree been holding captive a lot of investment money which might otherwise be invested elsewhere (bonds, precious metals and, of course, higher end real estate). When we eventually see the stock market slow down (I predict in 2018) we should see more investment in high end properties as the wealthy look for safe places to “park” their money. I discuss this subject in last month’s newsletter, QT(Quantitative Tightening) is Here!
Next month’s Hawaii Damon Newsletter will include my usual year end predictions for the economy and Hawaii Real Estate. 2018 should turn out to be an interesting year and – whatever happens – I truly believe we will be in an unprecedented long term low interest rates environment for a while to come.
Please do not hesitate to contact me, Damon Rhys, for any of your real estate needs here in Hawaii. If you have managed to read my newsletter all the way to this point I would certainly be happy to work with you and your family in your next real estate transaction. Please feel free to contact me,Damon Rhys, here.
Perhaps one could expand on the sailing and Columbus navigation analogy described above to a jet threading a needle needing to get the pitch, roll and yaw just right to make it thru without crashing – the economy. Seat belts strapped in, hang on tight and stay tuned to the Hawaii Damon newsletter as I’ll be giving updates on how flight QT is coming along!