When the pandemic started, many industries came to a standstill. Businesses temporarily closed and people hunkered down at home. Unlike in 2008, the housing market did something completely unexpected. There was a housing boom.
The demand for homes skyrocketed. With that, prices increased too. Despite a global pandemic, homes on Oahu were selling for top dollar. In 2021, I sold a home for nearly $200,000 above our list price!
Locally, the housing market did not slow down. First, mortgage rates were at an all time low -- this was a driving force that motivated buyers. Developers like Castle & Cooke, DR Horton, and Howard Hughes were selling new projects. Also, Avalon Group, sold out on their Hawaii Kai project too.
Castle & Cooke and DR Horton cannot build the homes fast enough; the homes sell like hot cakes. When Koa Ridge and Hoopili release more homes, there are countless buyers who are submitting their application. To account for the high demand, Castle & Cooke increased their prices and reduced the commission for cooperating brokers.
Why are homes so expensive? The answer boils down to a few things: (1) scarcity of buildable land; (2) supply chain issues with materials.
Living on an island, there is only so much buildable land. First, Oahu is divided by two mountains, the Koolau Range and the Waianae Range. The topography of both mountain ranges are so steep, a developer cannot really develop the land.
Then you have to ask yourself, "Who are the largest land owners?" First is the State of Hawaii, then it is the federal government, then it is the monarchy lands (which many have become charitable trusts or REITs), and lastly are old kamaaina families that never or rarely sell.
After you add all this up, what is left is less than 10% of buildable land. This is extreme scarcity and that leads to higher pricing. With only so much buildable land, developers now have to build vertical -- highrise condos.
It is equally important to discuss our current supply chain issues. It is safe to say that cement, copper, steep, paint, and wood are low in supply, high in demand, and very high in price. Recent reports have said that rising wood prices have added at least $36,000 the cost of a new home. Also, copper prices have increased 125% from its low in 2020.
Long story short, there is a shortage of everything and homeowners and home buyers are paying the price. I know this first hand since my wife and I did a full remodel on our home.
Will things get better? This is hard to determine. First, we could be heading to a recession (or we could already be in one). However, some analysts have said the prices for raw materials will continue to rise. Nationally, President Biden signed a $1 trillion bipartisan infrastructure deal. Locally, let's not forget that Oahu is an island. The costs of goods are even higher since we have to ship everything. This creates an added layer of cost that eventually gets passed down to the consumer.
In the past two years, shopping for a new home has been difficult for many people. However, there are still opportunities in our housing market. Historically, owning Oahu real estate has gradually increased over the long term. Although mortgage rates have increased, waiting on the sidelines might not be the best strategy. I have helped numerous buyers since the start of COVID. Call me and let's find you a home. When it comes to Hawaii real estate, expect the unexpected.
Forward Realty recently listed a 2-bedroom/2-bathroom/1-parking fee simple condo at 2215 Aloha Drive #11J for $599,000. This Aloha Towers unit features 1,171 square feet of living space and a large open lanai. The unit provides convenient and comfortable living in a well secured building, complete with central air conditioning, gas stove, dishwasher, and a washer and dryer. The building has bike and surfboard storage, general storage, visitor parking, a dog run, and a recreation deck with a pool, hot tub, sauna, and BBQ, as well as 24-hour security and a Resident Manager. Please contact me for more information.
Back On Market
At the end of June, Forward Realty listed a 2-bedroom/1-bathroom/1-parking fee simple condo unit at 1069 Spencer Street #101 (Crown Thurston) for $415,000. Within a week or two of being on the market, the seller accepted an offer. Unfortunately, the buyer recently cancelled due to cold feet. The unit features newer appliances, counter top and kitchen cabinets, flooring, microwave hood, paint and water heater. If you are looking to live in town, Crown Thurston could be the perfect place for you. Please contact us for more details.
Greg and I will be listed a property on Pohakupuna Road in Ewa Beach. It is an older single-family home that consists of 3-bedroom and 1-bathroom. The property is just a block away from the water too! Stay tuned for more information.
Are you looking to spruce up your home? Adding new flooring, like repainting, can really transform your home. When my wife and I remodeled our condo, we decided to go with a higher grade carpet. We eventually choose MoHawk Smart Strand Moon Glow. In addition, we purchased a memory foam pad and a moisture barrier too.
Although we nearly opted for luxury vinyl flooring, we decided to purchase carpet for the following reasons:
1. Casual and comfy. If you grew up in Hawaii, you probably had carpet in your home. Although the carpet we purchased was on the more expensive side, it visually looks casual. This is the vibe we wanted, especially when we have guests over. Also, who doesn't like the feel of carpet on their feet?
2. Price. Higher grade carpet is cheaper than high end vinyl flooring. Since this is not our forever home, we did not want to over remodel our condo. One option most homeowners do is install carpet in the bedrooms and luxury vinyl in the other areas of the house. Higher quality luxury vinyl can actually be installed in the bathroom and kitchen too. Make sure you speak to a flooring consultant to get more information about this.
3. Quiet. Carpet reduces the noise. Also, if you live in a condo or a townhouse, you might have house rules about the type of flooring you can and cannot use. I won't be surprised if your association recommends carpet over a hard surface flooring.
4. Safety. If you have a baby or small children, carpet might be a better option since it is softer.
If you are looking for flooring, contact Trisha and Lance Takehara of Paradise Flooring. Tell them I sent you.
Hawaii News Now recently reported that the City and County of Honolulu has revoked the building permit for 9-bedroom, 7-bathroom monster home in Pacific Heights home. Many owners have spoken against this development and a Change.org petition was created. The owner, Tony Shi, is planning to appeal the permit revocation.
Did you know you can tent a boat for termites? According to the Department of Land and Natural Resources (DLNR), Aloha Pest was hired to tent a boat while floating in Kaneohe Bay. Aloha Pest responded that they have tented boats on the water before and the chemicals used are not harmful to the marine life. However, a DLNR spokesperson said the chemicals used for tenting can be toxic.
Construction has begun on a waterfront playground at Hoakalei Resort in Ewa Beach. The main attraction will be the world’s largest man-made wave for surfing. This will be open to all people.
Stay safe and healthy.