Hawaii Housing Market Finds Balance

Ben Severson vividly remembers what a charged competitive environment it was three years ago when he was trying to buy a home amid the frenzy that was the Oahu housing market.

With flashlight in hand on a dark morning, the bodyboard designer and lifeguard scouted a Makaha house he heard would be listed for sale soon, and quickly made an offer to beat what he feared would be a bidding war.

He edged out five other offers.

“It was pretty stressful,” he said.

This year, Severson, 42, bought two more homes with relative ease months after the properties were listed for sale, illustrating the market’s dramatic change from high-pressure to stable equilibrium.

The calming is not without exception, but broadly has meant more choices, more negotiating power and less urgency for buyers who can be more discerning because home inventory is up and sales are down.

For sellers, homes are taking longer to sell. And it’s become far less simple to set an attractive sale price now that everyday bidding wars and rapidly escalating values have ended.

Also, the swelling ranks of real estate agents has begun to dwindle, speculative investors are largely gone, and in a few cases, people who bought a home last year and now need to sell quickly are losing money.

“The market that we’re now in is much more balanced,” said Steve De La Peña, vice president of O’ahu operations for Century 21 All Islands. “Buyers have the time to look around and make choices. They have less pressure to jump on something right away. It makes it easier on everybody.”

De La Peña said the heady Hawaii housing market clearly began to mellow around the middle of last year, but that today’s level of activity remains healthy.

“It’s still a great market,” he said. “Stepping down from the best market in the history of Hawai’i real estate — that’s OK.”

The number of O’ahu single-family home and condominium sales peaked in 2005 at 12,607. Sales dropped 17 percent to 10,421 last year, and have continued to decline this year but at a slower pace.

Homes that a couple of years ago spent a median 15 to 30 days on the market before selling have spent a median 40 to 70 days on the market this year.

Inventory, which dropped to roughly 1,700 units in mid-2005, has been around 4,000 this year.

Median prices in the Honolulu housing market, meanwhile, began to wobble late last year after doubling since 2001. This year through April, the single-family home median price is up just 1 percent to $630,000.

The year-to-date median condo price is $322,000, up almost 6 percent compared with a 15 percent rise last year.

The number of active O’ahu real-estate agents also recently began to dip, after surging from 6,143 in mid-2002 to 8,719 in mid-2006.

As of April 16, there were 8,503 active agents, as declining mortgage loan activity takes its tool on the profession, according to the state Real Estate Commission.

Hawaii mortgage brokers often are working harder to cinch sales now that the scene of quick-action buying has dissipated, and they are earning less as a group.

During the first four months of the year, total dollar volume of O’ahu home sales was $1.66 billion, down 7 percent or $125 million, from $1.79 billion during the same period last year.

Angie Pasion, an agent with Aloha Hawai’i Realty, said she typically had three to five clients a month four years ago as prices and sales gained steam. This year, she has two or three clients a month.

“It has slowed down,” Pasion said, adding that business is not bad. “I think this market is healthy.”

Pasion said one of the bigger recent challenges has been dealing with tighter lending standards instilled in the fallout of several Mainland lenders struggling with defaults on exotic home loans.

“It has a tremendous effect,” she said. “I find that more challenging than selling. I have the product, but it’s the mortgage companies now providing the pressure.”

For buyers who can qualify for a Hawaii mortgage, they generally have more power to negotiate as the seller’s market transitioned to a more or less evenly balanced environment.

The shift, however, hasn’t been pleasant for Kapolei homeowner Regina Akpinar, who would prefer that the market’s robust growth had continued.

Akpinar and her husband bought their home during the frenzy in October 2005 after moving to Hawai’i from Florida, another overheated housing market that has come back to earth of late.

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