Oahu Sees Steady Home Prices Despite Elevated Interest Rates

The Oahu housing market remained strong last month despite persistent elevated interest rates. Single-family home prices remained relatively flat (down 1.4% vs last year), and condo prices actually increased (up 3.3% vs last year). While we are seeing inventory begin to grow in certain market segments, the overall inventory levels remain low.

Here are some of the key questions we’re getting from clients…

I heard the market isn’t as “hot” as it was. Is the median home price dropping below a million?!

No — not at this point. Prices have remained strong this year despite market headwinds. The median price for a single-family home on Oahu was $1,110,000 last month compared to $1,125,000 last year (a 1.4% drop). This relatively flat year-over-year pricing was mirrored in a relatively flat active inventory pool (up 0.3% vs this time last year). However, there is a difference in how inventory is performing vs last year.

Last year we saw more new listings which were moving quickly into escrow (typically under 13 days on market), which kept overall inventory levels low. This year, however, we are seeing less new listings (-13% year-over-year) which is keeping low inventory. Homes are now taking a little longer to sell once on the market (typically 18 days), which would usually cause inventory levels to rise. But with seller’s hesitant to put their home on the market, inventory hasn’t seen the natural uptick.

Check out the charts below to see the relatively steady home prices and inventory levels on Oahu.

Are buyers still buying?

The short answer: yes, buyers are still buying but many would-be buyers are sidelined due to increased costs of borrowing. Year to date sales are down 32% for single-family homes and down 31% for condos. In addition to rates, some of this decline in sales is also a normalization of the market after the pandemic-era buying frenzy. While many of our listings still receive multiple offers, they are often not the +$100K over asking and waiving all contingencies type of offers we were seeing a few years ago.

When will interest rates go back down?

The answer to this question depends on who you ask. The federal reserve has raised rates 11 times since last year. This is the fastest pace of rate increases in 50 years. Some expect that the fed will pause on rate increases this month others expect the Fed will continue to raise rates. Whether the Fed does or doesn’t pause on rate increases, there is general consensus that mortgage rates will not likely have any significant drops in the very near future. However, some believe that rates should at least stabilize or be cut within the next 12–18 months. This would be welcome news to many would-be buyers who are struggling with the higher monthly costs in today’s lending environment. It will also help ease our low inventory as many would-be sellers are hesitant to put their homes on the market as they don’t want to walk away from the low rates they’ve secured on their current home to move into a higher rate loan on a new property.

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