O'ahu Market Update - May 2023

The O'ahu Real Estate Market continues to strengthen and recover from a low point in October of 2022. While the median home sales price of $1,109,000 is lower than the same month last year by 3.9%, home prices are up by 10.9% compared to last month. Similarly, the condo median price is slightly lower than the same month last year (.3% down) and up 3.3% compared to last month. Demand is also starting to rise as we move into the summer months as closed sales for homes (up 26%) and condos (up 4.3%) drifted upward compared to the previous month.

Historically, affordability for housing in Hawai'i has been a steeper climb compared to other areas across the country. When working with buyers, we find that buyers are focused on how much they can afford and their monthly payment. Affordability is a function of down payment, mortgage interest rates, home prices and income. During the month of May, a household earning the median income for Hawai'i, can afford 121% of the median priced condo and 53% of the median priced home on O'ahu (assuming a 20% down payment). Therefore, most people living on island can afford to live in a townhome or condo and not a single-family home.

What needs to change to make homes more affordable? The answer could come in the form of lower home and condo prices, lower mortgage interest rates, larger savings for down payment or higher wages. Any of those changes would make home purchasing more achievable as long as the other factors listed remain unchanged.

In past real estate cycles here in the islands, niche markets emerged during a shift. Lis Pendens, an early indicator of foreclosures, have risen in the past 12 months. Investors have been gobbling up condotels riding the surge in travel following the pandemic. Contact your sales agent for more information if interested in a niche market, or general real estate questions.

 

Read the full report from the Honolulu Board of REALTORS® here.

Does Outdoor Improvement Bring Happiness?

Would you be happier if your outdoor space was remodeled with a fireplace, a swimming pool, or a new wood deck? In the 2023 Remodeling Impact Report: Outdoor Features, the National Association of REALTORS® found that nearly all homeowners reported increased happiness with their completed outdoor projects – 9.7 out of a possible “Joy Score” of 10.

Using Census data for the average-sized U.S. home – 2,500 sq. ft., built after 1978, and situated on a 14,000 sq. ft. lot – NAR collaborated with the National Association of Landscape Professionals to learn the results of 11 landscaping projects, plus their costs, estimated return on investment for homeowners, and homeowner happiness.

Among the outdoor projects included were: fire feature ($9,000), in-ground pool addition ($90,000), irrigation system installation ($6,000), landscape lighting ($6,800), landscape maintenance ($4,800), new patio ($10,500), new wood deck ($16,900), outdoor kitchen ($15,000), overall landscape upgrade ($9,000), tree care ($2,875) and standard lawn care service ($415).

Interestingly, homeowner happiness was not tied to the highest cost recovery. Homeowners reported the highest Joy Scores for in-ground pool additions (10), landscape lighting (10), and new patios (9.9). Standard lawn care service, the least expensive of the 11 projects, had the highest cost recovery (217%), followed by landscape maintenance (104%), an overall landscape upgrade (100%) and an outdoor kitchen (100%).

Consumers remodel to add features, improve livability, upgrade worn-out materials, or simply make a change. Another benefit to outdoor remodeling is curb appeal, which is important to homebuyers, says 97% of NAR members.

The Decline of the Open Kitchen

The pandemic that began in 2020 was life-changing in all aspects, including home design. As workers stayed home to work remotely, they began to appreciate what a difference more space could make. Before long, the hottest housing market ever emerged as households sought larger homes with more creature comforts.

What many found were homes that had been designed and built for busy dual-income families featuring a large bright “open kitchen.” Instead of separating the cook from the action in the den or living room, open floor plans allow cooking, eating, TV watching, working and socializing to take place in one large contiguous space. This was embraced as a liberating innovation that promoted connectivity for overscheduled families to see more of each other, but the result was more noise, more messes to look at, and a more chaotic environment. 

For luxury homeowners who value privacy, relaxation, and comfort, the open kitchen plan has had its day. Room differentiation makes a huge difference in creating an elevated lifestyle. One way to do that is to be more intentional with interior design, wall placement, and traffic flow. Good wall placement helps establish the desired ambiance for each space. The den is a family retreat again, the living room welcomes visitors and clients, and the kitchen is no longer party central. Explains MansionGlobal.com, separating rooms makes each one feel properly proportioned and easier to furnish. An open plan must be more cohesive, while defined rooms can have their own personalities and colorways.