Honolulu real estate market

Downtown Honolulu, HI, view from Punch Bowl.
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The Honolulu real estate market, by far the largest single component of the Hawaii housing market, showed some positive signs of tentative growth in the most recent tracking periods. As a result of a gradually improving tourism market and an overall stronger economy, Honolulu homes for sale are being purchased at a higher rate than in months past. According to a November 19, 2010 report from the Honolulu Star Advertiser, the Aloha State’s economy is recovering more rapidly than analysts had previously expected. Tourism, which is Hawaii’s largest industry and source of revenue, is poised to see a volume increase of 7.7 percent this year to 7.02 million total visitors. This prediction by the Department of Business, Economic Development and Tourism (DBEDT) would reverse what have been two consecutive years of declining visitor numbers. In the last quarterly report, DBEDT had forecast almost two hundred thousand fewer visitors. According to the same report, DBEDT suggest that visitor spending will increase by just less than fifteen percent to $11.47 billion. Similarly, the August forecast predicted an increase of about eight percent, to $10.81 billion. To a state that depends primarily on tourism numbers, a boost of more than half a billion dollars is extremely positive news. According to Eugene Tian, the acting chief economist for the state of Hawaii, “The numbers show that the recovery really is speeding up. What’s interesting is that while the state economy has been growing better than expected, at the national level growth has been below expectations.” The evidence also suggests that Hawaii’s economy is benefiting from federal stimulus money as well as the projected uptick in tourism. Most encouragingly, the state gross domestic product is now scheduled to increase by about 1.5 percent, an improvement over the previous 1.4 projected contraction. Economists also believe that a steady recovery for Hawaii will continue for at least two years (through 2012 and 2013). In an opposite trend from the state of Hawaii, the federal government adjusted its projected GDP gain downwards, which might have an adverse effect on government spending, which is the second largest component of Hawaii’s economy. However, according to the University of Hawaii Economic Research Organization, the state’s construction industry might be in trouble, having lost about thirteen thousand jobs since the peak of the market was achieved in 2006-2007.

Some of Honolulu’s distressed commercial real estate will have a new owner soon if a purchase deal is approved as expected. A November 22, 2010 article from the Honolulu Star Advertiser detailed a proposed buyout of Price Busters and Let’s Party stores by two local real estate groups. Honolulu firms The MacNaughton Group and Kobayashi Group announced the plan to purchase the bankrupt retailer, forming  a partnership called Retail Partners Hawaii in order to acquire ERT Sales of Hawaii Inc., the owner of eight Price Busters and Let’s Party stores on Oahu. The purchase price of the eight properties and other financial considerations were not released as part of the announcement. Because ERT is currently under federal bankruptcy protection, the buyout deal still has to be approved by the court system. Thankfully for the job market, Retail Partners has indicated that it would not released the nearly three hundred individually currently employed by ERT. Retail Partners is notably locally for pursuing retail mall development and owning a number of Blockbuster Video, Starbucks, Jamba Juice and P.F. Chang’s stores. Under the proposed settlement, the owner and founder of ERT would remain active in the running of his stores as a consultant for Retail Partners.

The average purchase price of Honolulu homes for sale remained relatively static year-over-year, although inventory fell and average number of days on the market declined as well, according to Honolulu Magazine. There was relatively little movement in the Honolulu real estate market in terms of the average sales price of single family homes. In fact, the median price of a single-family home in Honolulu in October 2010 was $595,750, a decrease of barely one percent from the same time in October 2009. The average sales price of condominiums showed even less movement, in fact remaining at the same level reported in October 2009 at $300,000. However, the amount of time that properties spent on the market continued to be quite low, indicating that the Honolulu housing market has a relatively rapid turnover rate. The number of days that a single-family home spent on the market dropped by nearly a third in October 2010 compared to October 2009, while condominiums  remained on the market for thirty-seven percent fewer days than year-ago levels. The number of properties on the market in Honolulu declined further in the most recent tracking period, with eleven percent fewer single-family homes and five percent fewer condos listed for sale compared to the same time last year.

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