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Context of the Market
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Single Family Condominium(data through 3/31/2016)
Single Family 2016 Median Price: $725,000Condominium 2016 Median Price: $380,000
“Price Run” Cycles
A Look at Oahu Price Cycles
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Single Family Condominium(data through 3/31/2016)
Single Family 2016 Median Price: $725,000Condominium 2016 Median Price: $380,000
During a Price Run, Properties can Appreciate 15% to 20%, or more, per year
A Look at Oahu Price Cycles
Price Records Set in June
Four Graphs Tell the Story
1.) Inventory 1980 ‐ 2015
2.) Interest Rate History
3.) 38‐years of Bid‐ups
4.) 38‐years of Prices & Runs
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Single Family 2016 Median Price: $725,000Condominium 2016 Median Price: $380,000
What Causes Prices to Increase?
Competition for Properties
The Market Context Formula
Inventory at Record Lows
+ Interest Rates at Historic Lows
= Competition for Properties
= Prices on the Move
Inventory Near Record Lows
Through June 2015, Inventory Levels for Single Family Homes and Condominiums remain near the lowest ever recorded.
Low inventory increases upward pressure on prices.
Oahu Available Inventory 1980 ‐ 2016
Oahu Available Inventory 6/30/16
Perpetual Housing Shortage
According to Paul Brewbaker, former State Economist and President of TZ Economics;
Oahu needs 3,500 new housing units per year.
Perpetual Housing Shortage
Typically, the State issues a maximum of 1,500 permits per year for new housing. Building permits issued between 2009 and 2014 were lower than in
any period since WWII.
Each year, we fall behind by 2,000+ Housing Units.
We are likely over 60,000 behind . . .
The cost of money remains at historic lows. At today’s rates. everything is on sale.
Interest rates at historic lows mean the number of Buyers is at record highs.
Interest Rates at Historic Lows
Interest Rates Still at Historic Lows
Fed intervention began September 2008
The combination of low inventory and a highnumber of Buyers creates an environment for
competition = Bid‐ups.
A “Bid‐up” occurs in a competitive market when a property receives multiple offers, and sells for
more than the listed price.
As the percentage of bid‐ups increase, median prices increase.
Competition Drives Prices
Competition for Properties
Percentage of Sales above List Price = Bid‐ups
Bid‐ups Drive Prices
Bid‐ups are the Mechanism for Median Price Increases
“Price Run” Cycles
A 38‐year Look at Prices
Price Runs Match Bid‐up Increases
Bid‐ups Drive Prices
