It’s a seller’s market
If you didn’t buy in 2012, you may have missed the boat, according to realtor Berton Hamamoto of Property Profiles Inc.
Hamamoto was one of several speakers at the annual forecast breakfast put on by BOMA (Building Office Management Association), CCIM (Certified Commercial Investment Member), and IREM (Institute of Real Estate Management) to talk about the different aspects of real estate and predictions for the year. Since Hamamoto's section was specifically about residential real estate, I’ll focus on his remarks here.
“The market goes in cycles. Prices increase, then it works its way out into a seller’s market, then goes into a lull again,” Hamamoto says. “We are showing signs that we are off and running into that price increase market.”
He says the seller’s market is still in its beginning stages, but there’s a lot more “leg” to this market because you don’t see any new inventory—so supply won’t meet the demand.
“You often see a lot of new projects coming out at once so it meets the demand (and then some) with oversupply,” he explains. “With no—or relatively few—new developments, you don’t have a lot of supply for the foreseeable future, except some of the ones in Ewa that are planned for the future.
“There’s nothing to absorb the demand that’s out there. Oahu is definitely in the beginning stages of a sellers’ market,” Hamamoto adds. “Buyers haven’t bought into that yet, but it’s coming—they can no longer negotiate a lower price when buying a home. All the reasonably priced properties out there are selling in a couple days, so if you’re still in the market to buy, buy quickly.
Aside from inventory pressure, prices are rising quickly, making it more difficult for buyers in the market.
In the last market, a $250,000 condo would jump $3,000 to $5,000 with each sale. You might see a $15,000 price increase for a (kind of) unit by the end of the year,” Hamamoto explains, but warns that prices may jump $10,000 to $15,000 per sale.
He showed an example of a generic, cookie-cutter home in Montecito/Tuscany in Ewa Beach: In 2009, during a bad economy, a 1,276-square-foot home there sold for about $340,000. In 2010, a similar unit sold there for $370,000, and in 2012 that model sold for $410,000.
“If you bought in 2009 and sold in 2012, you would have made about $70,000—in the worst recession market in one of the worst places on Oahu,” he says.
What about people like me, who only own one piece of the rock? Hamamoto says owners will see their equity grow and reap benefits of the marketplace without having to do anything.
“If you knew the stock market was definitely going to go up in the next year, wouldn’t you put money into it? Same for the real estate market,” he says, predicting a 10 to 15 percent increase in prices over the next year, as a blended median.
I knew I should have bought a unit in The Cove Waikiki.