How Much is Your Home Worth Now?

August 3, 2010

Site Staff,

What a difference five years makes. When HONOLULU Magazine last did a feature examining home prices in Hawaii in 2004, the real estate market was on fire, with soaring prices filling hopeful home buyers with urgency. You couldn’t buy a house fast enough. Today, it’s a much different picture. The global recession has bruised Hawaii home prices and squelched demand. The median sale price for a single-family home on Oahu has dropped more than 8 percent compared with this time last year, with certain neighborhoods seeing a decline of as much as 37 percent. (See our chart of which neighborhoods have seen the most dramatic price shifts on page 32). The number of homes being sold has dropped off sharply, as well—down almost 35 percent compared with the same time in 2008.

What does this mean if you’re trying to buy or sell a home right now? We spoke with local real estate experts to get a sense of what’s really happening in the market, and get some tips for the best way to respond to the situation.

First of all, it’s easy to look at numbers like this and recall the bursting of the Japanese investment bubble in 1990, which sent the local housing market into an almost decade-long spiral of pain.

But real estate pundits say the current situation is far from the end of the world. Despite increasingly gloomy economic forecasts, there are a few reasons Hawaii won’t crater the way some Mainland markets have.

“It’s pretty clear that the housing market is going to stay weak until the economy turns around,” says Harvey Shapiro, research economist at the Honolulu Board of Realtors. “But this is not a The larger economy may be in crisis, but it’s important to note that the dropping home prices we’re seeing aren’t a bubble popping as much as an inevitable correction to a decade’s worth of dramatic increases, during which the median price of a home skyrocketed from below $300,000 in 2000 to almost $700,000 in 2007.

Chason Ishii, president of local real estate firm Coldwell Banker Pacific Properties, says, “The escalation was really based on long-overdue, pent-up demand. When new inventory became available, the market continuously moved forward, as the economy and the overall business was doing quite well.”