Trulia, a Mainland-based real estate data and listing service, recently reported that homes in Honolulu are the second-most overvalued in the country. Considering the expense of real estate on Maui and throughout the state, the conversation is worth having on any island. Is Honolulu real estate as overvalued as Trulia claims, or is it accurately priced? And what about the other islands?
As you might imagine, there were those who objected to the validity of Trulia’s report. The Honolulu Board of Realtors pointed out that Trulia pulls data from multiple sources, including individual brokers, while the board’s multiple listing service, HiCentral MLS is really the most accurate place for a clear picture on prices. In fact, their data is refreshed every 15 seconds. Meanwhile, Mike James, the CEO of Coldwell Banker Pacific Properties listed several reasons why he thinks the report is “ridiculous.”
James stated that Honolulu is facing a severe housing shortage despite the new condo developments, which is a very real and valid factor behind Honolulu’s high real estate prices. There’s too much demand and not enough supply. That will always bring up prices. He also mentioned that not only is the market based on supply and demand, but home values are set by consumers, not computers. Every one of these considerations apply not only to Honolulu, but to the rest of Hawaii, including our Maui market, to an extent. Inventory is extremely low at this point, and that will always drive up prices.
In May, the median price of a single-family home was $682,000 on Oahu and $540,000 on Maui. Both are high compared to the rest of the nation, but Honolulu is a metropolitan area with a much bigger economy, and therefore, a bigger population. The Honolulu Board of Realtors pointed out that Mainland companies might not take into account the ways that Hawaii isn’t like the other 49 states. We’re an island state, and our land for homes is limited, which causes an increase in prices. It’s true. And while there are other small states in the U.S., those states are contiguous, so in some places, you can easily live in one state and work in another. The board also astutely highlighted the fact that Hawaii is a popular market for investment properties, and with these historically low mortgage interest rates, there’s more demand, but the supply of new housing hasn’t kept up with that demand.
The conclusion is, there are major, key differences between Hawaii and the rest of the nation when it comes to real estate price considerations. Trulia and other Mainland companies aren’t likely to take these factors into account in their evaluations. If you want accurate data, the best sources are local. For Maui information, go to the Realtors Association of Maui, or call us, and we’ll describe Maui’s real estate climate. We’re a family-owned Maui real estate brokerage, and we’ve been in business since 1976, so you can imagine our intimate understanding of our market.
mauiluxuryrealestateteam.com – By Robert J. Cartwright, Principal Broker