Market Update forMarket Update for

Hawaii Hawaii Developer’s Developer’s

CouncilCouncil

July 21, 2005

Harvey A. ShapiroResearch Economist

Honolulu Board of RealtorsEmail: harveys@hawaii.rr.com

HDCHDC

Why is the Oahu housing market

soaring?

7/21/2005

High Demand for Housing

Extremely Limited Inventory

Low Financing Costs

RESIDENTIAL RESALE VOLUME ON OAHUQUARTERLY, 1990 - 2005

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1990

- Q1

1991

- Q1

1992

- Q1

1993

- Q1

1994

- Q1

1995

- Q1

1996

- Q1

1997

- Q1

1998

- Q1

1999

- Q1

2000

- Q1

2001

- Q1

2002

- Q1

2003

- Q1

2004

- Q1

2005

- Q1

SINGLE FAMILY CONDO/APT TOTAL SALES

TOTAL RESIDENTIAL PROPERTY SALESCombined Single Family Home and Condominium Resales

OAHU, HAWAII: 1992 - 2005, Monthly and Annual

SOURCE: Honolulu Board of Realtors® Research Department, compiled from MLS data.

0

200

400

600

800

1000

1200

1400

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Monthly Sales Annual Sales Rate

Monthly Sales Annual Sales Rate

Results for the

First Half 2005

HDCHDC 7/21/2005

CHANGES Percent Percent2005 2004 Num Percent 2005 2004 Change 2005 2004 Change

OVERALL OAHU 2,200 2,183 17 0.8% $551,100 $439,000 25.5% $704,149 $556,060 26.6%

Metro Oahu 269 259 10 3.9% $590,000 $525,000 12.4% $674,549 $565,775 19.2%

East Oahu 453 406 47 11.6% $825,000 $680,000 21.3% $1,074,091 $903,744 18.8%

Windward Oahu 363 381 -18 -4.7% $695,000 $555,000 25.2% $861,966 $655,760 31.4%

North Shore 79 73 6 8.2% $850,000 $492,000 72.8% $1,067,785 $749,013 42.6%

Leeward Oahu 1,036 1,064 -28 -2.6% $455,000 $356,500 27.6% $467,049 $372,087 25.5%

OVERALL OAHU 3,921 3,692 229 6.2% $245,000 $197,000 24.4% $298,765 $242,765 23.1%

Metro Oahu 1,932 1,794 138 7.7% $248,500 $210,000 18.3% $299,141 $258,855 15.6%

East Oahu 295 243 52 21.4% $454,000 $369,000 23.0% $555,768 $468,033 18.7%

Windward Oahu 215 261 -46 -17.6% $320,000 $260,000 23.1% $342,574 $268,349 27.7%

North Shore 72 33 39 118.2% $322,500 $279,000 15.6% $603,182 $271,293 122.3%

Leeward Oahu 1,407 1,361 46 3.4% $210,000 $174,000 20.7% $222,092 $175,737 26.4%

Honolulu Board of Realtors®

Multiple Listing Service

YEAR-TO-DATE Through June 30, 2005

SINGLE FAMILY HOMES

Statistical Summary of RESALES

MEDIAN SALES PRICESNUMBER OF SALES AVERAGE SALES PRICES

CONDOMINIUMS

ALL SALES: 6,121 5,875 246 4.2%

SINGLE FAMILY HOMES

Percent Percent

2005 2004 Change 2005 2004 Change

TMK Area Designations OVERALL OAHU: $1,549,127,800 $1,213,878,980 27.6% $1,171,457,565 $896,288,380 30.7%

Zone 1 and 2 Metro Oahu $181,453,681 $146,535,725 23.8% $577,940,412 $464,385,870 24.5%

Zone 3 East Oahu $486,563,223 $366,920,064 32.6% $163,951,560 $113,732,019 44.2%

Zone 4 and 5-1 through 5-4 Windward Oahu $312,893,658 $249,844,560 25.2% $73,653,410 $70,039,089 5.2%

Zone 5-5 through 5-9 and 6 North Shore $84,355,015 $54,677,949 54.3% $43,429,104 $8,952,669 385.1%

Zone 7 through 9 Leeward Oahu $483,862,764 $395,900,568 22.2% $312,483,444 $239,178,057 30.6%

TOTAL DOLLAR VOLUME: $2,720,585,365 $2,110,167,360 28.9%

CONDOMINIUMS

TOTAL DOLLAR VOLUME OF SALES

Honolulu Board of Realtors®

Multiple Listing Service

YEAR-TO-DATE Through June 30, 2005

Statistical Summary of RESALES

Increased demand has resulted in HIGHER

PRICES

HDCHDC 7/21/2005

RESIDENTIAL MEDIAN SALES PRICES ON OAHUQUARTERLY, 1990 - 2005

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

1990

- Q1

1991

- Q1

1992

- Q1

1993

- Q1

1994

- Q1

1995

- Q1

1996

- Q1

1997

- Q1

1998

- Q1

1999

- Q1

2000

- Q1

2001

- Q1

2002

- Q1

2003

- Q1

2004

- Q1

2005

- Q1

SINGLE FAMILY COND/APT

$577,800

$257,000

NOTE: 2005 Data is through First Quarter only

SOURCE: National Association of REALTORS Publication, Real Estate Outlook

Annual Median Prices for Selected Cities

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

1998 1999 2000 2001 2002 2003 2004 2005

Honolulu HI

Orange County CA

San Francisco CA

Los Angeles CA

San Diego CA

Bergen/Passaic NJ

Las Vegas NV

COUNTY 2005 2004 Change 2005 2004 ChangeHawaii 1,362 1,311 3.9% $374,500 $275,000 36.2%

Kauai 345 357 -3.4% $600,000 $465,000 29.0%

Maui 666 593 12.3% $670,000 $530,000 26.4%

Oahu 2,200 2,183 0.8% $551,100 $439,000 25.5%

TOTAL SALES: 4,573 4,444 2.9%

COUNTY 2005 2004 Change 2005 2004 ChangeHawaii 549 545 0.7% $369,000 $260,000 41.9%

Kauai 317 287 10.5% $426,000 $375,000 13.6%

Maui 981 1,100 -10.8% $371,500 $290,000 28.1%

Oahu 3,921 3,692 6.2% $245,000 $197,000 24.4%

TOTAL SALES: 5,768 5,624 2.6%

SOURCE: Multiple Listing Services from respective Boards of REALTORS

Number of Sales Median Sales Price

Year-to-Date through June 2005

CONDOMINIUMS

SINGLE FAMILY HOMESNumber of Sales Median Sales Price

STATE OF HAWAII

SALES OF EXISTING HOMES & CONDOMINIUMS

Residential properties Residential properties are selling faster:are selling faster:

Median number of days properties were on the market Median number of days properties were on the market before sales agreement (listing date to contract before sales agreement (listing date to contract date)date)

YearYear Single Family HomesSingle Family Homes CondominiumsCondominiums19951995 72 72 828219971997 6767

808019991999 5656

676720012001 45 45 42 42

20032003 2626 27272005 22005 2ndnd quarter quarter 17 17 1717

HDCHDC 7/21/2005

MEDIAN NUMBER OF DAYS ON THE MARKET

OAHU, HAWAII: 1987 - 2005, MonthlyDays between Listing Date and Contract Date

0

10

20

30

40

50

60

70

80

90

100

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Single Family Condominium

Number of Days

PREMIUMSPREMIUMS are being paid forare being paid for

residential properties:residential properties:Percent of Properties with Percent of Properties with sales prices > asking pricesales prices > asking price

YearYear Single Family HomesSingle Family Homes CondominiumsCondominiums19951995 1.7 1.7 2.22.219971997 4.0 4.0 4.54.519991999 7.1 7.1 4.74.720012001 11.2 11.2 8.98.920032003 18.218.2 10.4 10.42005 22005 2ndnd quarter quarter 28.0 28.0 26.2 26.2

HDCHDC 7/21/2005

Inventory is extremely limited

The number of available listings being actively

marketed is now only a fraction of what was available in the early

1990’s!

HDCHDC 7/21/2005

INVENTORY OF ACTIVE RESIDENTIAL LISTINGSOAHU, HAWAII: 1986 - 2005, Monthly

1986 - 2000

0

1,000

2,000

3,000

4,000

5,000

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Single Family Condominium

Number of Active Listings

Historically low mortgage rates

HDCHDC

Watch Out – They’ll be rising!

7/21/2005

W E E K L Y A V E R A G E Y I E L D SO F S E L E C T E D T R E A S U R Y S E C U R I T I E S

0.5

1.01.5

2.0

2.53.0

3.5

4.04.5

5.0

5.5

6.06.5

7.0

7.58.0

8.5

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

0.5

1.01.5

2.0

2.53.0

3.5

4.04.5

5.0

5.5

6.06.5

7.0

7.58.0

8.5

1-Year 10-Year

Percent Percent

However, Oahu properties are

currently more

AFFORDABLE

than they’ve been!

HDCHDC 7/21/2005

Median Sales Price vs Affordabilityof a Single-Family Home on Oahu

1985 - 2004, 2005 estimate

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

Med

ian

Hom

e Pr

ice

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Affo

rdab

ility (

Hous

e Pa

ymen

t as

Per

cent

of I

ncom

e)

Median Sales Price Affordability

Median Sales Price vs Affordabilityof a Condominium on Oahu 1985 - 2004, 2005 estimate

0

50,000

100,000

150,000

200,000

250,000

300,000

Med

ian

Cond

o Pr

ice

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Affo

rdab

ility (

Cond

o Pa

ymen

t as

Per

cent

of I

ncom

e)

Median Sales Price Affordability

Median Sales Prices, Actual vs Inflation-Adjusted

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

$550,000

$600,000

$650,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Actual

Inflation Adjusted (base=1990)

Inflation Adjusted (base=1999)

Estimate

In Summary…In Summary…Residential Residential sales expansionsales expansion for thirty-two (32) quarters for thirty-two (32) quarters

Sales in 2005 will be similar to last year’sSales in 2005 will be similar to last year’sand prices will increase about 20% - 25%and prices will increase about 20% - 25%

Another EXCELLENT year for Another EXCELLENT year for residential real estate!residential real estate!

PropertiesProperties are are selling selling significantly significantly fasterfaster

Price appreciationPrice appreciation continues continues

PremiumsPremiums paid above asking price paid above asking price

InventoryInventory availability continues availability continues lowlow

HDCHDC

AffordabilityAffordability is still very favorable is still very favorable

7/21/2005