Sep. 8—A $1 million house on Oahu has officially become run-of-the mill.
For the first time ever, a monthly median sale price for single-family homes on the island breached the million-dollar mark—hitting $1, 050, 000 in August, according to Honolulu Board of Realtors data released Tuesday.
It's a shocking figure to many consumers, yet reaching this pinnacle wasn't a surprise to industry observers given a sustained run-up in prices that began in January and has been largely driven by extraordinary demand outstripping relatively low supply amid low mortgage interest rates.
"Market conditions have been pointing to a $1M median single-family home price this year for some time, " Jason Lazzerini, president and CEO of brokerage firm Locations, said in a report last month.
The Honolulu Board of Realtors said August's median sale price for such homes was up 25 % from $839, 000 in the same month last year.
Condominiums also sold for a record median price last month—$500, 000—representing a 16 % gain over $430, 000 a year earlier.
The median price is a point at which half of all sales were for a higher price and half were for a lower price.
For single-family homes, August's median price represented the seventh time in eight months this year that a new peak was reached.
The progression started at $883, 000 in January, then moved to $917, 500 in February, $950, 000 in March, $978, 000 in May, $979, 000 in June and then $992, 500 in July.
Two neighbor islands—Kauai and Maui—beat Oahu to the million-dollar mark, with Kauai hitting it in January and Maui following in May.
Local economist Paul Brewbaker said during a June online event organized by Honolulu-based real estate brokerage firm Luxury Homes International that the local housing market definitely is having a "freaky " year that has led some folks to question if a price bubble has formed.
"Single-family home prices are clearly punching out, " he noted.
In Brewbaker's view, a market bubble doesn't exist. Instead, he expects the recent exceptional demand, which has been driven in part by a new legion of at-home workers looking for better homes, will eventually ease up and lead prices to realign with their historical long-term average annual growth rate of 4 %.
"I would say this is not a bubble, " he said. "This is transitory ... . We need to put that in perspective."
Over the first eight months of this year, Oahu's median single-family home sale price is up 20 % to $960, 000 from $799, 000 in the same period last year.
The year-to-date gain followed a 5 % rise last year after a 0.1 % slip in 2019.
Demand for homes had been weak last year, with a 2 % gain in single-family home sales and a 13 % decline in condo sales. This year through August, sale volume is up 27 % for single-family homes and 68 % for condos.
In August, there were 425 single-family home sales, up 15 % from 370 a year earlier. The number of condo sales surged 65 % to 675 last month from 409 a year earlier.
Brewbaker said the stronger demand for condos hasn't created as much of a run-up in prices because more inventory exists and has been generated in part by many condo owners putting units on the market in response to vacation rental prohibitions and the tourism industry downturn.
This year through August, the median condo sale price is up 8 % to $465, 000 from $430, 000 in the same period last year.
Shannon Heaven, president of the Honolulu Board of Realtors and an agent with Property Profiles, noted that much of the year-over-year spike in August's median single-family home sale price was due to a tripling in the number of homes sold for more than $2 million.
"Those really begin to push that median price up, " she said in a video posted by the trade association. "There seems to be a lot of money floating around in our economy right now."
Coldwell Banker Realty in January began categorizing homes priced at $2 million or more as Oahu's "luxury " market, after increasing the benchmark to $1.5 million in 2016 from $1 million.
Patti Nakagawa, a luxury property specialist with the firm, said in a May report that prices were being pushed up by multiple offers from buyers willing to pay significantly more than list price.
In its most recent Oahu luxury housing market report, Coldwell Banker said the number of single-family home sales for $2 million and up more than doubled to 41 in July from 19 in the same month last year.
As for what $1 million will buy, homes that sold last month for the $1, 050, 000 islandwide median price included a tear-down on a 4, 750-square-foot lot in Kapahulu, a 2, 357-square-foot Mililani home built in 1982 and a 1, 200-square-foot house in Kaneohe dating to 1955 but remodeled in 2008.
The Kapahulu and Kaneohe properties were each listed for $925, 000 and spent eight and nine days, respectively, on the market before an offer was accepted. The Mililani home was listed for $950, 000 and spent seven days on the market.
HOMES August Sales Median price 2021 425 $1, 050, 000 2020 370 $839, 000 Change 14.9 % 25.1 %
CONDOS August Sales Median price 2021 675 $500, 000 2020 409 $430, 000 Change 65.0 % 16.3 %
Source : Honolulu Board of Realtors