Historically low mortgage interest rates and a lack of inventory continued in October to drive up Oahu’s home resale prices during the COVID-19 pandemic, fueling bidding wars and speeding up sales to a median of less than 20 days on the market.
October’s median sales price jumped 10.9% to $865,000 for a single-family home, according to data released Friday from the Honolulu Board of Realtors. That was up from $780,000 in October 2019. The median price is a point at which half the sales were at a higher price and half at a lower price.
There was a negligible difference in homes sold with 345 sales, just two fewer than a year ago.
The median sales price for condominium resales remained steady, slipping by just 0.3% to $439,500 from $441,000 in October 2019, while the number of sales went up to 480 from 472, a 1.7% increase.
“In the more than 40 years that Locations has tracked the Oahu real estate market, we’ve never seen nearly half of all single-family homes bid up above the asking price,” Locations President and CEO Jason Lazzerini said in a statement. “We’ve never seen homes fly off the market as quickly as they did in October, either.”
Bid-ups on single-family homes reached an all-time high of 43.3% in October, while condo bid-ups climbed to 20%, the highest in more than two years, according to Locations.
The Honolulu Board of Realtors said the number of single-family homes sold above the asking price more than doubled from last year, with more than half of those in the $700,000-to-$899,999 range going above asking price. Condos that sold above asking price increased by 63.9%.
“With mortgage interest rates below 3% for several months now, the market has widened for buyers and sellers,” Lazzerini said, adding that the lack of inventory in the single-family home category limits some but gives others more options in the $1 million-and-higher category.
The Honolulu Board of Realtors said the greatest shift in single-family home sales occurred in the $600,000-to-$699,999 price range, with a 56.8% decrease in sales and a 52.3% drop in new listings. Sales in the $800,000-to-$1,199,999 range increased 39.2%.
Board President Tricia Nekota said sellers are appropriately setting their prices, which are “an indication of what buyers are willing to purchase or put forth on a property because of the competitive nature of what they are in right now.”
Bidding wars “are happening right now. People are vying for the same property, so you have to put your best foot forward,” she said.
“At the local market level, Ewa was the top-performing single-family home market in October,” with sales up 6% over 2019, Locations announced, with availability dropping 73%.
Kailua scored as the top-performing condo market, with a 5% increase in sales and an 8% increase in median price.
During the pandemic, with lockdowns, working from home, learning from home and social distancing, many are seeking larger homes outside cities both locally and across the country.
But with many losing their jobs, who is buying these properties?
Elizabeth La Riva, a broker with Locations, said after the pandemic hit, “we did get phone calls from international and mainland buyers and investors, thinking the market is going to crash, who wanted to offer $100,000 less” than the asking price in cash, sight unseen.
Others who want to see properties in person did not want to quarantine for 14 days.
“I have clients on standby, even now with the 72-hour testing,” and they are “waiting to see how things settle before or after the holidays,” she said.
Nekota said that in Hawaii many who want “to get their foot into homeownership” start with a condo or townhouse, using it as a steppingstone to a bigger purchase with the equity they’ve built up.
Because of COVID-19, she is seeing multigenerational living styles, with families combining their resources and purchasing larger homes in a higher-priced category, she said. It allows for “aging in place and the family being together during these uncertain times and financially being able to support each other as well.”
Another indication of who is buying homes comes from Veterans Administration data.
Use of the VA Home Loan program benefit jumped 142% this fiscal year in Honolulu compared with last year, Veterans United Home Loans reported. Honolulu ranked fourth for biggest growth in VA loans in fiscal year 2020.
John Jacobson, research market analyst with Locations, said there is no good data now for 2020 on whether local, foreign or mainland buyers are the ones buying in the residential home resales category during the pandemic, since that public information comes from the Bureau of Conveyances, when a buyer indicates where the tax bill is mailed to, which is “months down the road.”
In 2019 “the local buyer is the No. 1 dominant buyer, though we make a lot of noise about mainland or foreign buyers,” he said, saying the percentage is in the high 70s.
With record-low inventory for single-family homes, “it made for a very competitive market, and COVID was a brief wrinkle,” a three- to four-month depression, Jacobson said.
To serve clients, real estate agents have had to resort during the pandemic to different methods, which La Riva is familiar with.
She specializes in military buyers, who would prefer to buy sight unseen, before arriving in the islands. She uses video chat and takes videos of the property and surrounding neighborhood.
“I’ve been really busy through the pandemic. I’m my clients’ eyes,” she said, and has applied these techniques with other buyers.
But La Riva said many are holding off selling. She has a landlord client whose tenants are afraid of the new coronavirus and do not want to allow potential buyers in to see the home.
Jacobson said there were many more foreclosures from 2009 to 2012 than there are right now, but “that kind of information on foreclosures is still some six months away.”
Nekota said, “We’re going to see more signs of that later. Now it’s too early to tell with loan modification or forbearance or unemployment and keeping themselves afloat.”
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HOME SALES
The number of homes sold on Oahu in October with the median price and percentage change from the same month last year:
HOMES
Date Sales Median Price
October 2020 345 $865,000
October 2019 347 $780,000
Change -0.6% 10.9%
Condos
Date Sales Median price
October 2020 480 $439,500
October 2019 472 $441,000
Change 1.7% -0.3%
Source: Honolulu Board of Realtors
