The Hawaii real estate market is red hot. For the month of September 2020, on Oahu, we’ve broken 2 all-time records for single family homes. Let’s look at the Honolulu Board or Realtors market statistical infographic for September 2020.
Take a look at the left-hand side of the above picture. The median price for a single-family home was $880,000, a new record price. Ok and I think the statistic below that one is just crazy. Median days on market is 9 days! 9 days. So that’s from the day the home is listed, to the day it goes into contract and escrow is 9 days. That’s just crazy. You know so if you are selling your home, you’re basically a demi-god, like Maui. And if you’re a buyer, you’re like Hei Hei (if we’re talking Moana references). Well I’m joking but not really.
For my seller clients I’m telling the buyers, leave your escalation clauses at the door, it’s just too crazy to try to figure out who is on top. For my buyer clients, it’s a discussion of how are we going to strategize to win this eminent multiple offer situation. We’ll need a clean and tight offer, offer up a whole bunch of concessions AND, how badly do they want it, because it will be best communicated in our appraisal clause.
Here’s a real life example of what it takes to win on a transaction. For one single family home in central Oahu that went into escrow yesterday after being on market for just a few days, listed in the high 600 thousands, there were 22 offers, the winning offer was way over asking, the survey and professional cleaning were waived, termite inspection was to be paid by buyer, 5 day professional inspection, 35 day closing and a sixty thousand dollar appraisal clause, a sixty thousand dollar appraisal clause. That’s what it takes to win in this market.
For those of you asking what is an appraisal clause. This is a contingency that if the appraisal comes out to be under the value of the contract price, the buyer will come up with the extra cash to make up for the deficiency and satisfy the lending terms.
So what’s causing this FRENZY you ask. Well you probably know about the all-time low interest rates, so that’s part of it. Another factor is pent up and shifting demand towards single family homes due to buyers’ needs changing with more employees working from home, children distance learning, and everyone just being home more. Also, people can explore neighborhoods they couldn’t before as they don’t have as much concern about daily commutes and traffic. COVID 19 is having buyers reassess their housing needs.
On top of the increasing demand for single family homes, there is the other side, Supply is low. In September, the months supply of inventory of single-family homes was 1.9 months. What is months supply of inventory. Well if there were no new homes to go on the market today, it’s how long it would take to sell off the existing inventory. 1.9 months of inventory is extremely low, I think it’s a record breaker as well, at least for the last 15 years from the data I pulled. For some perspective, they say 5-6 months supply of inventory is the range for a balanced market, meaning neither a sellers nor a buyers market.
Another reason for this MARKET HOTNESS is this year’s delay in the military PCS activities. According to the Honolulu Board of Realtors, there was a 26.1% uptick in single family purchases using VA loans compared to last September.
So, there’s some insight on why the Hawaii real estate market is so crazy right now. I hope you enjoyed it. Check out my recent video, “Why You Shouldn’t Buy a Home Now!” I’ll put the link in the comments below. While you’re down there, I’d love for you to subscribe and click the bell to get reminders of my weekly videos that come out every Monday. Thanks for watching and in the words of Roman Emperor Marcus Aurelius, “Perfection of character is this: to live each day as if it were your last, without frenzy, without apathy, without pretence.” See you next time!
