For our 2018 Oahu Real Estate Market Forecast, we will review a snapshot of the market and its trajectory into 2018. 2017 marked the sixth consecutive year of price appreciation for residential real estate statewide, with Oahu reaching record levels for single family median prices again. Commercial real estate continues to do well with steady rental rates and vacancies overall. The optimism from the Tax Cuts and Jobs Act of 2017 may prolong the real estate cycle.
Residential
Sales of both single family homes and condominiums in 2017 have increased 7% and 9% respectively with the median prices increasing 4% for single family homes and 5% for condominiums. 1 in every 3.3 single family homes and 1 in every 4.1 condominiums are selling above the list price. With a stable interest rate environment of 4-4.5% there is likely to be continued appreciation of approximately 5% in 2018 with steady sales. Though we predicted that the beginning of the market turn was in 2016, consumer optimism from the Tax Cuts and Jobs Act of 2017 will keep things moving.
Here is my opinion with regard to residential housing in 2018:
• Buyers- “Buy for the long-term.”
• Sellers- “Price attractively as buyers are more discriminating.”
• Builders- “It’s a good time to sell.”
• Investors- “Think about the long-term growth of a developing region.”
Commercial
Commercial real estate continues to do well with the exception of the office market. The industrial sector has a 2% vacancy rate and no new inventory in the near-term. The retail market remains steady with CAM and wage increases offsetting gains in rents. Investors are watching how online retailers impact brick and mortar stores as malls attempt to reinvent themselves for a more attractive consumer experience. The sales of Turtle Bay Resort and the former Pacific Beach Hotel mark the strength of the resort market. The office market continues to struggle and is being held back by the trend of office space downsizing.
Here are a few thoughts on commercial real estate in 2018:
• Landlords- “Retain good tenants and look for new opportunities.”
• Tenants- “Be aware of higher CAM and wage expenses.”
• Investors- “Consider the long-term demand for your property.”
