September 7, 2011

By Andrew Pereira, KHON2

HONOLULU - New figures by the Honolulu Board of Realtors show the median price of real estate on Oahu taking a plunge in the month of August compared to the same time last.

According to a report released Wednesday, the median price of a single family home stood at $557,500 last month – a 13.1 percent drop compared to the same month in 2010.

The median price for condominiums came in at $300,000 – a 1 percent drop compared to a year ago.

Brian Benton, a sales manager with Prudential Locations and former BOR president, believes there's no reason to panic over the decrease in home prices. The report shows homes that sold in August stayed on market for a mere thirty-one days while condos remained listed for forty-one days, a sign that those who are selling still hold some leverage over buyers.

"When you look at low days on market, (and) a declining inventory, these are strong indicators that this is moving towards a market that is gonna be picking up steam," said Benton. "When the average prices are selling for 95 percent of the list price, that means that it's a strong market."

Another positive sign for Oahu real estate, the overall number of homes (279) and condominiums (338) purchased last month marked an increase compared to a year ago, when 231 homes and 294 condos were sold.

However University of Hawaii economist Carl Bonham is more cautious. He believes real estate prices throughout the state will remain relatively stable through 2012.

"Right now we're really looking at somewhat stagnant, fairly sideways movement in housing values and that's not really expected to change too much, certainly not this year or next year," said Bonham.

If any one thing is to blame for holding back Oahu's real estate market, Benton believes it's a lack of consumer confidence. He hopes President Barack Obama's jobs speech before a joint session of Congress Thursday results in legislation that increases optimism min the U.S. economy.

"We'll see what the president has to say about perhaps stimulating the economy and the market going forward," said Benton. "It's going to take a lot more than talk to get this thing moving."

And while home foreclosures have had a dramatic impact on real estate prices on the mainland, the same dynamic is not taking shape in Hawaii.

"You're always going to be in a situation where people understand the value of real estate in Hawaii," said Benton. "It's not like I'm going to be buying a house at fifty cents on the dollar - that is just not going to happen."

IMPACT ON PROPERTY TAXES

If Oahu property values continue to fall it would be of great concern to the City and County of Honolulu, which depends on property taxes to fund most city services. Last year the city collected $178.2 billion in property taxes, of which $144 billion was from residential properties.

However unlike the Honolulu Board of Realtors the city's Real Property Assessment Division calculates the aggregate value of all property on Oahu, not the median price of what has been sold.

"We compare it from one year to the other, so that is really a different type of statistic that we are comparing," said Gary Kurokawa, the city's property assessment administrator. "I think we haven't seen any movement up or down (in home values), no earth shattering movement that we can tell."

In June the Honolulu City Council approved a measure introduced by Mayor Peter Carlisle that raised residential property taxes from $3.42 for every one thousand dollars of value to $3.50. The mayor also pushed through the elimination of the non-resident homeowners' class for property taxes, which had been set at $3.58 for every one thousand dollars of value.

Kurokawa says the city is currently processing valuation estimates and will begin mailing out property tax notices December 15.