The Impact of COVID on the Oahu Real Estate Market in May 2020

The Impact of COVID on the Oahu Real Estate Market in May 2020

We’re almost two months into the pandemic, and things still aren’t back to normal. In the meantime, everyone wants to know: how is the Oahu real estate market doing? How has the pandemic impacted Oahu home sales? How has the pandemic impacted prices? Will the market recover when the state opens up in June? Wait!…What!? What is the market recovering from? Is the market even doing that badly since the pandemic started?

We can give you a general idea of the impact of COVID on the Oahu Real Estate Market as we look at past data from early 2020.

April 2020 Oahu Real Estate Market Data.

Price Data for April 2020.

April statistics from the Honolulu Board of Realtors are just out. The median price for a single family home on Oahu is up 5.5% and the median price for a condo is up 7.4% from 2019. Keep in mind that most of these closings are the result of sales that happened between the middle of February to the middle of March, before Oahu was on lockdown. Our cycles are usually 30-60 days. We have yet to see whether there will be some price pressure downward for homes and condos that close in May 2020, as a result of the market uncertainty in late March and early April. Our guess is that the May market stats will be either flat on price, or there will be a slight price depression. Probably the same for June. We think this due to erratic market/seller/buyer behavior in later March and early April (canceled escrows, withdrawn listings, price reductions, etc.). Effects will be seen in May and June. However, in our opinion, it is unlikely that there will be large price drops, due to basic concepts of supply and demand.

April 2020 Closed Sales Data.

The number of closed sales in April 2020, for both single family homes and condos, is down significantly from 2019 (22% and 27.9%, respectively). However, this trend is consistent with sales also in February and March of 2020 where sales were also down, compared to 2019. This makes sense, regardless of the pandemic, because Oahu has had a shortage of new listing inventory throughout 2020.

New Listings Data for 2020 Oahu Real Estate Market.

Single Family Home – New Listings on Oahu.

As you can see from the chart above, new listings were down in 2020, as compared to 2019, even early in the year, prior to the COVID pandemic’s impact to Hawaii (shutdown started week 13, as noted by asterisk* in the charts.) This may be surprising to some, who thought there was more inventory in early 2020, due to Bill 89. This was not the case in early January, or in February. In fact, there were only a few weeks on the first quarter of 2020 where the number of new listings were not lower than in 2019. Overall, in the first 18 weeks of 2020, new listing inventory is down by 25% from 2019. After week 13, however, when Oahu was put on lockdown, the number of new listings decreased by 42.8% from 2019. Clearly, the pandemic had a significant effect on new listings of single family homes on Oahu.

Condo Homes – New Listings on Oahu.

Buyers of Oahu condos faced a similar inventory dilemma in 2020. New listings of condos were consistently down every week of 2020, even before the pandemic. This too, with Bill 89 having taken effect in October 2019. In weeks 1-18 of 2020, new listings were down 25.7% over 2019. That said, the decrease in the number of new listings was noticeably larger after week 13 of 2020, when Oahu was put on lockdown, with weeks 13-18 at a 40.5% decrease.

New Escrows by Week on Oahu in 2020.

Single Family Homes, New Escrows.

For single family homes, the number of new escrows was up sigificantly pre-COVID lock down. Low interest rates and perhaps, the loosening of VA loan down payment requirements on January 1, 2020 may have lead to this burst of real estate market activity on Oahu in early 2020. The numbers clearly went down after week 12 (by 25%). This is understandable for various reasons related to COVID: there was less inventory, it became harder to see properties, many people did not want to go see properties, many people became worried about the real estate market on Oahu, etc. But overall, for single family homes, at week 18 the number of new escrows for the year is down only 1.7%.

Condos, New Escrows.

The same is not true for condos. Market activity was not up in 2020 as much as it was for single family homes. New escrows were already down in almost every week of early 2020, even before the pandemic lockdowns in Hawaii. The number of new escrows did go down very significantly, at week 13 and afterward, (by 50.1%) but overall, the number of new escrows was down 23.1% through week 18. New escrows for condos were down by twice as much as single family homes on Oahu after week 13.

Cancelled Escrow Data for 2020 Oahu Real Estate Market.

Right around the time Oahu began lockdown and social distancing measures, a significant number of escrows were also cancelled. The number of cancelled escrows more or less doubled between 2019 and 2020 at weeks 12-14 of the charts. Reasons that I heard about related to both buyers no longer being able to qualify and also to questions of market uncertainty. However, you should note there were, presumably, more single family properties already in escrow in early 2020, during weeks 2-11. This was not the same for condos, as the number of new escrows was down between 2019 to 2020. The canceled escrow numbers, below, may therefore, overstate the impact of COVID-19 on the single family market and might understate the impact of COVID-19 on the condo market.

Single Family Homes Escrows Cancelled.

Condos on Oahu, Escrows Canceled.

Price Decreases in Oahu Real Estate, Pandemic of 2020.

All of the other data is interesting, but what most people really care about is price. Have prices gone down? Will they? As I mentioned before, we won’t have great price data resulting from the start of the COVID lockdown until May and June. However, we can see price decreases through MLS data we already have, which may provide some clues. Perhaps surprisingly to some, there were more price reductions per week in 2019 then there have been in 2020, even after the Pandemic lockdown in week 13! What are the reasons for this? Perhaps initial prices were more competitive in 2020, after sellers had learned not to shoot so high in a relatively stable market? Perhaps, it was the increased competition caused by lower inventory in 2020? Maybe there were also other reasons, for example, because inventory was also overall lower? Now, that makes sense.

I’m not sure exactly what we can glean from this data because it doesn’t really speak to the dollar amount of the price changes, only that they happened. Single family homes had 41.4% fewer price changes in 2020 than 2019, so far. Condos had only 18% fewer price decreases in 2020 than 2019. I think this reinforces the data above that single family homes were more in demand than condos overall. But that is not a new phenomenon on Oahu.

Single Family Homes, Price Decreases as a result of COVID.

Condos, Price Decreases as a result of COVID.

In summary, we can see from this data the following:

• Prices so far have remained fairly stable. As the economy worsens and/or recovers, things may still change. We will know more in June and July, when we have May and June data.
• New listing inventory is significantly down after COVID, but was already down from 2019, even at the beginning of the year.
• There was an initial surge of erratic behavior in weeks 12-14, as to escrow cancellations, but it has leveled out.
• There were a fewer number of price reductions on Oahu as between 2020 and 2019, but inventory was also lower.
• Basic concepts of supply and demand prevail even during a pandemic.

Please contact us for more information Yvonne Ahearn 808-721-8088 or Ana Kuna 808-295-2311.

Connect With Yvonne Jaramillo Ahearn, Esq. (B)

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