Right now, the real estate market on Oahu is in a frenzy and there is not enough inventory to go around, especially the single-family homes. This is mainly because of low inventories, pent up demand and record low interest rates. Because of the situation, buyers are having an extremely difficult time as they are fighting imminent multiple offers, basically bidding wars for listings. For home buyers, there is another option that not everyone considers and that is new construction.
There are actually quite a few new construction developments going on right now on Oahu. Most notably there is Castle & Cooke’s Koa Ridge. There is also DR Horton’s Hoopili in Kapolei. And don’t forget North Park in Ewa by Gentry. Demand for new construction is high also, and as such the developers release the homes in phases and perform a lottery for them. In a previous blog, “Buying New Construction,” I discuss the pros and cons of new construction (https://realestateofhawaii.com/real-estate-blog/the-cost-vs-benefit-of-buying-a-new-build-home/). On this blog, however, in light of all the craziness and strong seller’s market, I wanted to calculate which kind of property, new construction or homes for resale, would buyers have a better chance at getting.
Keep in mind that this is totally anecdotal, there is no statistical sampling or minimal sample sizes, and for pure entertainment purposes. Regardless, you want to watch until the end because I think you’ll find the results pretty interesting.
Ok so starting with resale properties. In the last month, there were three transactions for single family homes that I have intimate knowledge of, one in Makakilo, one in Ewa Beach and one in Mililani. All were very well-maintained homes, we shall say pretty much turn key properties. All three were on market for less than 10 days. One had 22 offers, another had 25 offers and the last had 23 offers. To be conservative we shall use 22 offers.
So, if there was 1 accepted of 22 offers, 1 divided by 22 is 4.5%. in this case for these turnkey single-family homes in Central Oahu there was a 4.5% chance of getting picked. Keep in mind that this does not take into consideration the type of offer you submitted, cash offer, $50,000 appraisal clause, $70,000 over asking. Your chances would be less if you were offering at the top of your price range and could only offer the asking price.
Ok, now let’s talk about new construction. So, there were two recent releases in central Oahu for new construction, one in Koa ridge, Nanea phase 4, and one in Hoopili called Hinahina. Coincidently both releases had around 8 units available for lottery. For both releases there were over 100 applicants. To be conservative again, I’ll assume 120 applicants. So, for 8 units, 120 applicants, 8 divided by 120 is 6.7%. And in the case of the new construction lottery, every applicant’s chances of being selected are absolutely the same. And actually, your chances are even better because sometimes the first lottery winners may pass on purchasing if their preferred model was already taken.
So, there you have it, 4.5% for resale, and 6.7% for new construction. According to my calculation, in this current market you may actually have a better chance at winning in a new construction lottery than you do putting an offer in a single family home in Central Oahu in turnkey condition. Is that something you would have guessed? Thanks for watching and in the words of basketball coach, Bobby Knight, ““The key is not the ‘will to win’…everybody has that. It is the will to prepare to win that is important.”
