Oahu home prices back on top - Pacific Business News (Honolulu):

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For once, that may be good news. It means the Oahu real estate markeg is relatively stable compared to the wastelanx of Mainland cities where new subdivisions sit and foreclosures have driven down prices by as much as 40 percent in California. But not so economists say. Job losses and income declines in theprivatse sector, and the proposed furlough of state will drag on the loca economy and pull down prices as cash-strappecd home-owners look to get out from undee mortgages they can no longer “We’re going to continue to see home prices fall said Carl Bonham, director of the and a member of the stats Council on Revenues.
“We’re not going to get the type of dropa that Californiahas seen.” In the early Honolulu’s median single-family home price was highedr than in the San San Jose, Anaheim and Santa Ana markets. But Hawaii’sd economy suffered a nearly decade-long downturj at the same time California’s was rising because of the dot-com especially in the Bay Area and Silicon Valley.
That trend began to revers last year, and was evidenyt in the first-quarter numbers published by the , whichg showed that Honolulu’s median single-family home price of $570,000 was far abovee the San Jose market’s median price of “I think it shows the stabilityy inthe market,” said Harvey research economist for the Honolul Board of Realtors, which released statistics this week showint May’s median single-family home price of $550,00p0 was down 15 percent from May of last For the first quarter, Honolulu’s median pricd was down 8 percent from 2008. Year-to-date, the median pricew held at $570,000 for the firsrt five months ofthe year, but that was 9.
5 percentt off the same period in 2008. By contrast, first-quartee median prices were down by more than 40 percenf in the Bay Area and by more than 28 percen t inOrange County. “It’s good news that our prices are holding Shapiro said. Jack Leslein, principal broket and owner of East Oahu has seen the cycles of the Honoluli real estate market go up and down duringf more than 30 years inthe business. The finit e aspect of available land on Oahu tendsd to be astabilizing force, he said.
“No w that we are again the most valuablwe real estate inthe country, I think it particularly attestsw to the fact that our market didn’tt take the severe swing that the rest of the countruy did,” Leslein said. “Our market tends to be more stablee because of the limited accessof property.” Shapiro believew the most positive sign from May’s statisticx is that inventory, the number of housese and condominiums for sale, was lowet in May than it was a year ago. “Ij Hawaii, our prices are weak but it’sd not because of explodedc inventory,” he said.
“Our prices are weak becausre ofreduced demand, but we’re not gettinf the double whammy of reduced demand and the inventory goingt way up.” Yet, economist Paul Brewbakedr points out that while prices may be holdingh relative to other cities, there’as really only one direction they can go. “It’sa comforting that Hawaii hasn’t fallejn as much as anywhere else,” Brewbaker said. “At this point the risk to Oahu is tothe downside.
” One factor affecting demand for homes is interest which have started to The rate for a 30-year fixed-rate mortgagwe was 5 percent at Hawaii’se three largest banks this week, three-quarterss of a percentage point higher than the record low rates of around 4.25 percenty in recent months. Tighter underwriting standards weed out buyerzs with low down paymentsand less-than-stellar credit, and a fear of inflatiohn could cause other prospective buyers to wait on the sidelines.
Yet, the primargy risk to Oahu’s housinb market is still “what happen s to jobs,” Bonham “When people’s income goes down, or they lose theire jobs, they’re being forced to throe their house onthe market,” he said. That, coupledc with adjustable interest rates that areadjustingb upwards, could cause Honolulu to see its foreclosurs rate continue to rise, he said. Whilre Hawaii did not see the huge numberr of foreclosures that crashed manyMainland markets, the stat was ranked 14th in the nation in the numbee of foreclosure starts during the firstt quarter, according to the Mortgagw Bankers Association’s National Delinquency Survey.
“Fod us, the primary reasom for foreclosures is going to be job loss andincomwe loss, and adjustable rates,” Bonham said, noting that a lot of foreclosuresd on the Mainland were due to adjusting interest “Our cycle was later so we had more of them to work And foreclosures will put more downward pressure on he said. UHERO has forecast a drop in home pricesx of 9 percent in 2009 and anothe r 5 percentin 2010, predictions that are drivej largely by the job Since the forecast was released in earlh March, the outlook for job growth for the state has worsened.
“With the additional problems of thefiscalo crisis, the outlook has worsened again, and the home price forecast will go down again,” Bonham referring to the state’s projected budget shortfalls over the next two Despite that, Honolulu will likely keep its distinctioh as the most expensive place to buy a since California’s priciest marketxs are unlikely to see any type of a rebound, he