Aiea, Hawaii (PressExposure) August 07, 2011 -- Local real estate agents are puzzled as to why home sales in Hawaii declined in the second quarter of 2011 after a strong first quarter.
On Oahu, the state's largest market, single-family home sales in the first quarter were up 3.8 percent over the same period last year, while condominium sales increased by 6.7 percent. But those gains were wiped out in the second quarter when there were fewer closings of single-family residences and condos.
Overall in the first six months of this year there were 1,375 single-family homes sold on Oahu, a 7 percent drop from the first half of 2010, according to the Honolulu Board of Realtors. Condo sales declined 2.6 percent from 2,062 in the first half of 2010 to 2,009 this year.
The median sales price of a single-family home decreased 2.6 percent in the first half of the year to $570,000, compared with $585,000 in the same period last year. The median sales price for condos remained relatively steady at $304,500, a 0.2 percent decrease.
Berton Hamamoto, principal broker with Property Profiles and president of the Hawaii Association of Realtors , said all the ingredients exist for a stronger sales market. He said inventory is low, but favorable interest rates and stable prices should translate into higher sales.
"In other markets with this kind of inventory and this kind of interest rate and demand, it would easily be a feeding frenzy," Hamamoto said. "We're watching it. I don't think anybody really knows what's going on."
He speculated that one reason for the weaker second quarter could be a lack of consumer confidence. He said the negative news coming out of Washington, D.C., regarding the budget deficit, coupled with financial issues locally during the legislative session, may have helped to drive down consumer confidence.
"You hear all of the stuff that's going on in Washington, that we're on the brink of financial Armageddon if they can't raise the debt ceiling and they can't come to terms with balancing the budget," Hamamoto said. "That's a big issue."
Joyce Nakamura, president of the Honolulu Board of Realtors, said she also isn't sure why sales shifted so much from the first to second quarter. She said several factors such as the loss in tax credits that brought in first-time home buyers last year may have played a role.
"It's hard to put your finger on it," she said. "People are making assumptions, but who knows?"
For the remainder of the year, Hamamoto is forecasting home sales to be stable, with the hope that things will improve in 2012. He said he believes that if lawmakers on Capitol Hill settle the debt matter on a positive note, things should start to look up for the consumer.
"My read of it is consumer confidence is really the issue at this point and it's predicated by the negative news and the instability in Washington," he said.
Nakamura added that, barring a catastrophe, she also doesn't see any major changes in the real estate market for the rest of the year.
Not all news was negative in Hawaii's housing market. Sales of single-family homes increased on Maui (4 percent) and the Big Island (5 percent), with condo sales increasing on Kauai (25 percent) and the Big Island (19 percent). However, the median sales prices on all Neighbor Islands were down in the first half of the year.