 state show dedicated to providing up-to-date information used to Hawaii homebuyers, sellers, and investors. I'm Wotanaka with my co-host, business partner, and wife, Leone Lab, a realtor with over 20 years of experience in various leadership roles in the Hawaii real estate industry. Thanks, Will. Will is a full-time realtor, a lawyer, a law school professor, and the former head of a Hawaii title and escrow company. Together as full-time realtors, Will and I are absolutely immersed in the Hawaii real estate market. We work as a team to bring you the latest in Hawaii real estate. For today's show, we are sharing directly with you about the Oahu market. From our own professional experiences, we'll discuss the statistics recently released from the Honolulu Board of Realtors. How is Hawaii's real estate market? What is going on with the market? When people find out that we are full-time realtors, we get a lot of inquiries and interests about what's going on. So let's jump right into it. And I think one of the hot topics is mortgage interest rates, right? I think that's one of the most frequently asked questions and comments geared towards us. Yes, it is. And so what are the experts saying about the mortgage interest rates for 2024? Great question. The expert predictions for 2024. And we noticed that they're all in the same range, in the 6% range. During the first week of 2024, in addition to forecasting a 6.3% interest rate by the end of the year, economists like Dr. Lawrence Yun. Dr. Lawrence Yun is my absolute favorite. I'm a huge fan of Dr. Lawrence Yun. Yes, I know that. And he's a chief economist for the National Association Realtors. And he said that home sales will likely increase 14% this year, which will be the biggest annual gain in more than four decades. So that's across the nation, not specific to Hawaii, right? That's right. He also said that if interest rates were to drop to 6.3% by the end of 2024 by the fourth quarter, that current homeowners may be more apt to give up their super low interest rates that they probably got from refinancing when interest rates were really low. And that he says that inventory may come up by about 30%. And I think that's kind of across the board. So you hear from Wells Fargo Mortgage Bankers Association, Fannie Mae, they're predicting the 30 year fixed rate will be anywhere between 6% to 6.5%. Okay, so everyone is sort of in the sixes, below 6.5% right now at least at the start of the year. That's right. So as of today, the mortgage interest rates were reported to be at about 6.8%. And that's up a little bit because yesterday it was 6.74. It's something that we're tracking every single day. Local lenders are advertising rates in the 6% range, but that's with points. The interest rate can always be lower if the borrower is willing to pay points to buy down the interest rate. Yeah, that's right. And then let's kind of get into the what's on the market. How is Oahu's active inventory looking? Yes. So for active inventory right now, there are 668 single family listings. And we're seeing that the majority of these active listings are actually west of Pearl City. Is that right? Yeah, so 668. I mean, that's definitely on the lower side. We were in the holiday season and traditionally on Oahu, it is, you know, November, December, January, it is going to be where there's a decrease in number of activities and new listings. So I think people are going to be warming up. We have listings coming up in the pipeline over the next couple of months. So in terms of the regions, so from Pearl City, Waipahu, if a beach Makakilo all the way to the river side that's in Waianae all the way to Makaha, accounts for 42% of all active inventory. So that's a lot of homes on the west side. Yeah, that is the majority. The next concentration of inventory would be in Metro Honolulu. So Metro Honolulu is basically Waikiki, Makiki, Manoa, Nuuanu, Salt Lake, Moanalua. So that whole area of Metro Honolulu is accounting for 16% or 109% of our active single family homeless stings. Then there's Diamond Head region, which is Kapuhulu, Kaimaki, anything in the 96816 zip code, you know, that goes to Aina Jaina, New Valley, Kulio'o. That's about 14% of our overall active inventory. And I would say that Diamond Head area is still pretty hot. So when a listing comes up in Kaimaki, for example, if it's well priced, I feel that it goes under contract fairly quickly. So it's still pretty hot market. That's right. And then kind of switching gears to windward side, Kanyohae, Kailua, that counts for about 13%. And I think Kailua is still pretty hot market depending on the area within Kanyohae, that that's still a very desirable area. Yeah, I agree with you. I definitely agree with you. Then there's North Shore. Central region is Mililani, Waipio. So Mililani is still a pretty highly desirable area for people to want to live in. And, you know, there's only 5% of our total active inventory single family homes out in Mililani. So definitely a shortage in that neighborhood, still a very hot neighborhood. And then there's Hawaii Kai. And Hawaii Kai only has about 4% 27 active listings right now. Hawaii Kai is an incredibly desirable and very hot market still. Absolutely. And especially with our barry clients and our friends and family, they're asking where are the deals, right? And of course, property condition is going to matter. So for example, of all the active listings on Oahu, 58 are in fair condition. So that means that's below average. No recent upgrades may need some upgrading plumbing, electrical, maybe a new roof. Depending on people's threshold, that could also mean almost moving ready and then just kind of upgrade over time. But the real deals are of course, the needs major repair or tear down condition, meaning bring your contractor, bring your friends and engineers and electricians, plumbers and possibly structural issues. There could be plumbing issues. So those are the so-called deals. But understand that there's going to be a lot of work and more work than you could probably even imagine. Right. And I think even for fair conditions, sometimes, you know, if you're going to do a showing for a fair condition at home, you should bring your contractor with you too. Because you're looking at pretty significant repairs that need to happen or upgrades. But good opportunities. Yeah. And then for example, a needs major repair home, the lowest price on all of Oahu is all the way in Y9. And it's on the market right now. It's a two bedrooms, one bath, 900 square foot home for 445,000. It's pretty simple, but it needs major repair. And for this one, if you just look at the photos, you could kind of really see the condition of the property. So in some cases, you're kind of just buying the land. Exactly. Yeah. And then on the other end of the spectrum, there's a tear down in Diamondhead for $3 million. Wow. And Diamondhead is an interesting neighborhood because sometimes the home values are even higher than Pahala, which was kind of surprising. But Diamondhead has a pretty good area. Through million dollars for a tear down. That's right. And then there's 290 single family homes that are listed in excellent condition. An excellent condition is what many, many buyers are looking for. Excellent condition, interpretation would be move in ready. Upgrades are done. It might have been recently renovated, renovated like within the last year or two. And one of the lowest price homes in excellent condition is in Makaha. And that is on the Leeward Coast. And that is a three bedroom, one and a half bathroom, smaller home, 944 square feet. And that one is listed at 575,000. So keep in mind, though, that Makaha, Y and I, some of those neighborhoods that we mentioned out West where there might be some deals, that is going to be at least an hour drive. Depending on traffic, it's probably going to be a longer drive. So just keeping that in mind. Well, you know, I do love that drive when we have time to go all the way to Makaha. It is beautiful. Yeah. It is beautiful. Yeah. But it is a drive. It is a drive. So, you know, when it comes to property conditions, like for example, some might view it as above average, but then they're like, wait, this isn't fair condition. So isn't it like really subjective? Yes. Property condition is very subjective. It's typically set, you know, somewhere between the seller and the listing agent, maybe both of them collaboratively. And it is so subjective, you really cannot tell what the property's condition is until you see it. And then, even when you see it, you might have your own sort of subjective opinion on what condition actually is. So these days, also photos, when you're looking at property online, photos are amazing. Technology has advanced. You know, photos can be enhanced. There is digital staging nowadays. So listed property condition is very, very subjective. And it is a guide, though, that we use and factor in when searching properties. Definitely. And I think on the buy side, when you have a lender, then the appraiser will look at the comps and they'll look at, okay, what condition was the other property yet? So that is always another factor to consider. That's a really good point. Yeah. So how about the condo market? Let's talk about that. Okay. So for active condos on the market right now, there's 1,366 total active listings. And keep in mind, though, 111 of those active listings are actually leasehold property. So that leaves us with 1,255 B simple units for sale right now. And where are they? Yeah. Well, and then the median maintenance fee is around $950 a month. So just keep that in mind. That's right. Yeah. So if you take that 1,366 total actives, the one in the middle, right? So half of them are above $950 and half of them are below. So basically for us, we feel like anything under 1,000 is within reasonable. Yeah. That's really dependent on the amenities and the type of building if they have a resident manager security. So lots of, you know, various factors to consider. So out of those properties, most of them is going to be concentrated in Waikiki and Kakaako area. That's a Metro Honolulu region stemming from Waikiki, Kakaako, downtown Honolulu, all the way to Salt Lake. So that counts for about 75% of all condos. Wow. 75%. That's a lot. And 413 of those are actually right in Waikiki neighborhood. So that's a high concentration right there. And 61 of those 413 Waikiki active condo listings are leased hold. And so that's about 55% of all the listings in Waikiki they're leased hold. And so that's a high concentration. And did you know also that there's 59 B simple units listed for sale at Trump Tower in Waikiki? That's a lot for one building, right? It is because I think prices range from like 390 for studio to 9.9 million for the Trump Tower. And then interestingly at the Ritz Carlton, there's also exactly 59 units for sale, ranging from about 580,000 to $17 million for the penthouse unit. And do you know what the highest priced sold unit at the Ritz back in 2019 was? How much it's sold for? The highest price sold at the Ritz. Well, I mean, if the highest listed price right now is 16, I don't know, like 10 million? Not quite, it's 7.5 million for a four bedroom, five bath, over 3100 square foot units. So must have been a pretty nice unit. Yeah, sounds like it. Interestingly, there's 192 newer built condos. So those are condos five years or younger. So built in what is this 2019? Or newer. So they're listed for sale in Kakaako. Yeah, there's a high concentration of condos there too. So and then there's 90 units actually, this is for sale in the Alamoana area. And did you know, 44 of those are in the Alamoana hotel condo tell. And so, you know, we talked about the Ritz, Trump, and now Alamoana, lots of listings available condo tells are for sale. Why do you think that is? Well, number one, hotel management fees for condo tells, they're high anywhere from 45% up to 60%. Like in places at the Ritz, they require furniture to be upgraded, you know, every few years. And you don't buy the Ritz for investment, people buy the Ritz for the brand. So, you know, pre COVID, there's a lot of Japanese investors buying the Ritz. They love those brand names. And then during COVID, I mean, they were losing a lot of money. So that's why you see so many, so many units at the Ritz for sale. So, and then from a buyer's standpoint, it's very difficult to get a loan for condo tells, unless you get a portfolio loan. So if you're like a first time investor, or I mean, you wouldn't be able to most likely not qualify for a condo tell loan. Well, that makes sense. So it's a tough investment because you're having really high carrying costs. So it probably doesn't console all in your favor. So maybe that's why there's so many listings on the market right now. That's right. Yeah. So if you were to minus out those super high end luxury and or condo tell condos, then buyers are really looking at a smaller selection inventory wise of about 900 or so total condos active for sale. That's right. And then 75% of it is in Waikiki Kakao downtown, right? And then there's only a few percentage in like Eva, Eva Beach. Proceed, there's about 52 units. Hawaii Kai, there's only 25. And oftentimes when we think about condos, we're thinking of high rises, but condos, town homes, I mean, sometimes it could be the low rise, the walk up condos as well. Sure. That makes sense. Yeah. So let's get into the actual real estate stats. And, you know, before we get into that, we always talk about the median sales price. That's what's usually the news, but there's also the average sales price. So Leonie, what's the difference and which one's better? That's a great question. And it's kind of like how we just kind of threw out about median condo maintenance monthly maintenance fees, right? So the median sales price, it's the number that we hear a lot about on the news. We hear it on reading in PBN, SAR advertiser, et cetera. So the median sales price is the midpoint. So for that period, the number of sales, they pick the one in the middle and that's the median sales price of all the homes. So half of the homes sold for higher, half of the homes sold for lower. And then the average sales price is different because the average sales price is going to be all of the home values that sold divided by the actual count of how many homes sold. So that number sometimes can get thrown off if there's a higher sale, like an anomaly, like high sale or a really low sale. So sometimes that number might vary versus median is just going to be fixed. It's like the one in the middle. Yeah. So you're saying that the median sales price is actually better than the average sales price? I think we use both values, but for me, I feel like median is probably going to be a little bit more reliable. And I think like when it comes to median and average sales price, both of them can give you a really good indication of what you might be able to sell your home for, or it can kind of give you an idea of what you might expect to pay if you're looking at buying in a specific neighborhood by looking at those values, you can kind of see what you might expect to pay for a property there. Yeah, good points. And now let's get into numbers. So did prices actually drop on Oahu? And is it a good time to buy and sell your property? Yes, we get this question quite a bit. So looking at our stats on Oahu, our median prices were slightly lower, but not by much. There was no drastic drops, as I think economists had predicted going into 2023. And that's what we saw. In December, the median sales price did dip below a million dollars. So it went down to 996,500, which is basically a 5% decline from 2022, December 2022, right, where the median was slightly above a million at a million 49,500. And then condos, the median sales price was 510 reported, you know, as of December, which is lower than November was, but pretty much the same. Okay. So, you know, pre-COVID, I remember the median sales price for single family homes was around 800,000. For condos, probably around low 400. And over the last two to three years, especially COVID, it just really jumped up. But I feel like it's been fairly consistent that it's been just hovering around a million dollars for single family homes and 500,000 dollars for condos, plus or minus a few percentages. So you're saying when it comes to median sales price, let's take the December numbers. So a million dollars. So there's 90 homes that sold for less than a million dollars and 90 homes that sold above a million dollars. Is that fairly accurate? Yeah, that's very accurate. Yes. And in addition to that, you know, listed properties are taking a little bit longer to sell than they once were. So we're seeing active property sitting on the market for a little bit longer, closer to a month versus prior, it was about, you know, one to two weeks or so. So now we're looking at active properties sitting a little bit longer, taking a little bit longer to sell. There were not as many new listings, fresh listings, for either single family or condo, not as much fresh inventories. And because active listings are sitting a little bit longer, kind of throws off the number of, you know, when you look at active listings, you're like, Oh, it's not that bad, but it's actually because listings are taking a little bit longer to sell versus having fresh inventory coming on. This being in January, though, like you had mentioned earlier, there's a lot of sellers that or owners that may have been holding off to put their listing on until the new year. So we are seeing a little bit more fresh inventory coming on right now. And then interest rates definitely impacted for at least in 2023 hugely impacted the number of closed sales or transactions that occurred. And they, you know, because interest rates were forecasted, I don't know, to be in the five, sixes or something last year. And then we saw them get close to 8%. So that was a huge impact on our real estate market. And yeah, in terms of closed sales, I think the last I heard it was we haven't had, we were in a similar market to where we were in 2011, 13 years ago, were in terms of number of closed sales. So the, you know, we have not yet, last year was definitely a slower time for the Wahoo real estate market, but I think it was like that nationwide. Yeah, yeah, I agree. And then you know, one of the interesting things is that in December, single family homes priced below a million stay very stable in terms of number of closed sales because who doesn't want a home in Hawaii for under a million dollars, right? Exactly. And we saw that with our own listings too, right? If we had something that was under, then it definitely goes. So that's what people are looking for. Yeah, for sure. So in terms of our market, how do you feel like our market is pacing here on a Wahoo? What's the velocity like? Yeah, so as you mentioned already, last year in 2023, sales were down 26% for single family homes and close to 30% for condos. But because of the magic word or magic words, low inventory, low inventory, we still don't have enough inventory to meet the buyer demands. So I think with the reported median and average sales, even though it was slightly down, it's not significant compared to COVID year. So I think it's going to be pretty steady this year. Right. I agree with you. I think that, you know, we continue to have an island wide shortage of housing inventory. It's kind of a continuing theme in our discussion here. But kind of transitioning, you know, as we look to 2024, as it pertains to real estate, you know, you're a lawyer. So let's go into your corner. Are there any laws that we need to be aware of as we go into 2024? I think the short-term rental law. So back in October, 2022, so a year and a half ago, our Honolulu mayor passed a law which was going to increase the short-term rental period from 30 days to 90 days. There was a lawsuit filed. They put a temporary injunction and so the city kind of could not enforce it. So the federal judge just came out with a ruling just this year, just last week. So they wrote that any owner who was operating the property as a minimum 30-day rental as of October 2022, then they should be able to continue to use that property as such. So they're kind of like bothered in? Exactly, exactly. Of course, you know, October, like if you have any rentals, I mean, you have to look at the law because there's some advertising laws and they used to have only two people kind of trying to enforce this short-term rental law. Now they increase the stack into five people. And then so if you purchase the property after October 23rd, 2022, then I think how I read it is the short-term rental is considered less than 90 days. So you have to really be careful and consult with your attorney and whoever you want to consult with, definitely with a professional to make sure that you're compliant with the Oahu Honolulu law. Yeah, we'll be keeping a close eye on that. Yeah, we could actually have a whole segment on this, but I think, you know, for time's sake, that that's just kind of the this quick summary. The update for now, we're going into 2024 and I'm sure there's more to come on that. Yeah. Okay, so let's get into some tips. Like for 2024, if you're thinking of investing, if you're thinking of selling, if you're thinking of buying or you're just interested in the Hawaii real estate market, let's get into some tips. Maybe we can start with some tips for sellers. Okay, for tips for sellers then, okay. So home sellers should know that the properties are taking longer to sell. So even if it's on the market for three to four weeks, I wouldn't necessarily panic because that's kind of like the new norm. And it sounds like, okay, it'll just fly off the shelf in 10 days or two weeks like before. Yeah, it kind of depends on the neighborhood and everything still though. But yeah, I agree with you. And properties also, they're not always receiving the full list price these days. Price reductions are becoming much more common, but it really again depends on the neighborhood and it depends how desirable the property is and the property condition. And it really depends on having that wow factor. So if you are a seller or you're thinking about selling, whatever you can do to prepare your property to bring it up to its fullest potential, when you bring it onto the market, that's going to be critical. Exactly, yeah. And then people who used to kind of just upgrade and then buy new property in Hawaii, that segment, it's much less common because for example, our interest rate is 3.75 at the open house this past Sunday, they were talking about, oh, we like this house, but our current house, it's at 2.25% VA loan. I mean, it's going to be very difficult for anyone to get that up, right? Right, right. And hopefully though, as our economists that we track and everything are saying, there's going to be a resurgence of this in 2024 if the interest rates were to go lower. So hopefully this will work. Yeah, let's talk about tips for buyers, okay, yeah. So for buyers, there's not as many fresh listings coming on. We are starting to see more because we're at the start of the year, but if a highly desirable property comes on, if you're in the market and you see a really great property that meets all of your specific needs, then please know that there's going to be a myriad possibly of other buyers that are feeling the same way because they've been waiting for that one too. So it can still get competitive. Sometimes it still goes under contract very, very quickly. So waiting to see it or deciding if you're going to make an offer, that's not always the best, the most advisable. You might want to act quickly because we're seeing it now for certain buyers that we have on different properties when they love it. So do like five other people and people are acting quickly. So just remember that it still can be competitive. Yeah. And then I think one final tip is if you're purchasing a condo, know that more than 90% of all Oahu condos were built before 1990. And some say that the condo market is in bit of turmoil. So you got to look at the condo docks. You got to see what's the upcoming repairs and maintenance. You also have to look at the hurricane sublimit because it's going to be very difficult to get insurance if the replacement costs and the hurricane sublimit cost is much lower. So just watch out for that. Yeah. And so this was a fun show, Leone. Again, this is Will and Leone on Think Tech Hawaii. We've been talking about the update for the Oahu real estate market. And thank you very much for being here. If you enjoyed this show, please hit the like button and subscribe to our channel youtube.com backslashthinktechhawaii.com for more great content on Think Tech. And then please visit the website thinktechhawaii.com. We'll be back in two weeks. So we'll see you again then. Thanks so much for watching. We're host, Will Tanaka and Leone Lam. Aloha, everyone. Aloha.