2016 marked the sixth consecutive year of price appreciation for residential real estate, with Oahu reaching record levels for median sales prices. Commercial real estate has also seen improvements with higher rental rates and lower vacancies overall.
In 2016 the median sales price for single family homes increased from $700,000 to $735,000 and for condominiums increased from $360,000 to $390,000. The days on market also decreased and number of available listings decreased even more. This led to an increasing number of bid-ups of roughly 16% for single family homes and 25% for condominiums. Affordability is the key driver for sales of lower priced properties as we reach the top of the real estate cycle.
Here is my opinion with regard to residential housing in 2017:
· Buyers- “Buy for the long-term.”
· Sellers- “We are in the midst of transition. Be smart about pricing.”
· Builders- “Sell your inventory now.”
· Investors- “Think about a long-term hold.”
Commercial real estate continues to improve overall. The industrial sector is performing well with a steady vacancy rate of 2%, and steady operating expenses. The retail market remains active with a higher vacancy rate due to the opening of Ka Manaka Ali’I in Kapolei. The office market experienced its lowest vacancy rate in 6 years. Multi-family apartments are still in high demand. There is low unemployment across the board, which is the sign of a healthy economy.
Here are a few thoughts on commercial real estate in 2017:
· Landlords- “Do your best to retain good tenants.”
· Tenants- “Be aware of higher construction costs.”
· Investors- “Look for quality investments for the long-term.”