Oahu Housing Inventory Is Low: What It Really Means

Click on Image for Honolulu Board of Realtors Report

Me (realtor): Congratulations on getting pre-approved for $550,000! Tell me your wishlist.

Buyer: We’d like 3 bedrooms (minimum), a 2 car garage, 2 bathrooms or more, a yard, split level, no jalousie windows (we hate those), no popcorn ceilings, preferably ground level, no one above or below us, pet friendly (our sweet boy Bailey is a slobbery 50 lb pit bull mix), and no HOA fees.

Me: (thinking…how do I tell them this just doesn’t exist on Oahu and how many more realtors will they talk to before they believe me and if they do wind up believing me, will they be back or will some other agent have them sign a Buyer’s agreement which they will  because they needed to hear it 3 times to believe it). 

So, yeah. That’s pretty much what it means, but not really. For the buyers who know next to nothing about Oahu real estate, it’s my job to educate and inform them of how little land we have on our beautiful island. When supply and demand are in an inverse relationship, that affects pricing (economics 101). Face masks are currently super cheap because they’re everywhere and no one’s using them anymore (except here in Hawaii…grrr). Oahu real estate is expensive because only 6% of it is fee simple to begin with. Add to that agriculture land, leasehold land that can only be leased to those who are 50% Hawaiian, golf courses, hotels & resorts, commercial space, nature reserves, military land, or land that is simply undevelopable/uninhabitable and you’ve got a supply issue. And don’t even get me started on how difficult it is to get building permits while the state of Hawaii has the highest number of state employees per capita…but I shall pump my brakes and swerve back into my lane. I am a real estate agent. An opinionated, sometimes unapologetic real estate agent who might also be startled awake in the middle of the night by the opinions I’ve shared out loud. Perhaps that will make you, as a client, a little more compelled to work with me as I enthusiastically stand by and communicate what I believe in. 

Inventory is low. Here’s a solid example and hopefully I don’t need to say much more. I have a buyer right now who qualifies for $550,000. They’ve lived here almost all their lives so they understand the scarcity. Their needs:

  • 2 bedrooms
  • 2 bathrooms (but they’ll settle for 1.5 baths. They have 2 boys and mom simply can’t share a bathroom with 3 men anymore)
  • 2 parking stalls – MUST. None of this “But you can find parking on the street.” Yeah. Right.
  • Preferred areas: Kaneohe, Kailua, Salt Lake in Honolulu, might go as far as Aiea, but probably not. 
  • Must be pet friendly. Pets are family! And they’re not willing to lie and say their pets are therapy animals.

In preparation for the weekend, I had my eyes on the MLS all week. It yielded 2 listings. TWO. That’s it. They went to see them. One was a little too small. They loved the other one and were ready to make an offer! The listing agent had 4 offers in hand before the weekend was over and offers were due by Tuesday at noon. She was expecting more and already had offers over the asking price. Prior listings in the building said “pet friendly,” but I verified with resident manager it is not – therapy animals only. Ugh!!!

Inventory is low. Do I need to go on? Okay. Here’s one more example. Economists like to say things like, “There is 1.5 months of remaining inventory.” Translation: if nothing else came on the market today, it would take 1.5 months for everything to sell. Anything less than 6 months is considered a seller’s market. Beyond 6 months shifts to a buyer’s market. 

Inventory is low. 

So what does this mean for you? If you have property to sell, it’s time. How does lack of inventory help you? It’s not only about timing the market and getting the most money for your property. After all, statistics show that real estate on Oahu only goes up over time. So yes, you can wait and probably still make more money in the long run, but as interest rates increase, the amount of buyers willing to jump in now, hard, and aggressively will be less. With inventory so low, you’ll have the choice of cherry picking the buyer who will close fast and easy and with a grateful, cooperative heart. As a buyer, you could wait until the market cools a little and hope prices will come down in this increasing interest rate environment, but the real question is, will you end up paying more anyway? Maybe you won’t have to bid up the price as much to beat out 19 other buyers, but you’ll pay a higher interest rate, higher payment, or will have to settle for less because the interest rate prices you out over the home price itself.

My bottom line will always be this, however: the most important timing is your own. If it’s time for you to let go of a property, do it now. If you want to own a property and you’re in position to do so, do it now. This chick in her mid-40s is finally starting to understand how fast the clock is ticking. Lack of land and inventory has always made Oahu, Hawaii different from other markets like California or Las Vegas. As a buyer, you just have to get in and most only wish they did it sooner and bought more. As a seller, you can’t look back. Real estate on Oahu only goes up, some years more than others, but over time, it just does. 

I write this from a flight over the Pacific back from Seattle in early March. When the pilot announced after take off that the weather is 80 degrees in Honolulu with northeast tradewinds at 15 mph, how do you think most people on this fully packed (fully masked) flight reacted? People love Hawaii. Politics aside, there is much to love about it. Demand is high. It always has been. It always will be. And I suppose that while I’m obviously mad we’re still wearing masks while the rest of the country is not, I’d rather wear a mask living in Hawaii than no mask somewhere else and clearly I’m not the only one who feels this way. 

Inventory is low. 

What’s Going On in Oahu Real Estate in 2022?

Welcome to 2020 too. You almost can’t unsee that. Sorry. Rewind! 

WELCOME TO 2022!

2020 and 2021 created so much shift – in money, in business, in lifestyle, in mindset. 2022 seems to be the year we’ll actually plant ourselves in those shifts. For me, personally, I’m realizing I’m turning 40 freaking five! When the heck did that happen? I swear I’ll be 37 forever, but only if my metabolism and hair color would agree. Darn you JLo for raising that bar so freaking high and for having way more money than the rest of us to make a perpetual 37 years old a reality.

Who am I? Why am I here? I’m Maila Gibson-Bandmann (pronounced My-La not Mali-a). Much like “2020 too,” some of you all refuse to unsee and unsay Mali-a. I was a singer for the first 20 years of my adult life doing a little bit of real estate. Now that I’m in the next 20 years of my adult life, I’m a realtor on Oahu who does a little bit of singing. I wasn’t blessed with children, but I am crazy about my fur kids and I’M FORTY FREAKING FIVE!!! I might be in a midlife crisis. I’m not leaving my husband for a younger man or anything like that. I love him to life. My midlife crisis is more along the lines of realizing my generation needs a voice. I hope to be one of them who speaks truth, finds community, and as a bonus, if I get to help you with your real estate in Hawaii…YAY!

What happened in real estate on Oahu in 2021? The same thing the rest of the United States experienced: historically low inventory, historically low interest rates, tons of buyers, not enough homes to sell, people working from home therefore abandoning their condos in the city and moving further away and into the homes of their dreams. The media likes to tell it this way: “Home prices escalated to unaffordable levels due to wealthy mainland buyers buying every single house for sale and pushing locals to the streets or Las Vegas.” Here’s the truth and you can look it up in public records. The number one buyers of real estate in Hawaii were Hawaii residents. Where did the rest of them come from? Second place goes to California buyers with less than a thousand purchases on Oahu out of 15,741 homes sold. They accounted for only 6% of all home sales on Oahu. Next was Japan and then Washington for less than 400 sales combined. What makes California buyers love Hawaii so much? Other than similar lifestyles and a salad bowl of cultures, our property taxes are the lowest in the country. For every $1000 of assessed value, it’s only $3.50. On a home assessed at $1 million, that’s only $3500 per year. Cost of living in Hawaii is expensive (let’s not beat that dead horse), but property taxes are low. Now there’s a win!

So if Hawaii residents really bought all this property, how did they afford it? Low interest rates coupled with appreciation. Interest rates were in the 2’s and 3’s all year. Many sold and bought something else or they refinanced and cashed out. Single family homes ended around a median price of $1M. Condos ended up around $500K. Condo sales surged as new construction in Kakaako (such as ‘A’ali’i) became available. 

What’s going on in 2022? Is the market going to crash? Probably not, but I’m not psychic. We still have a supply problem. We just don’t have enough homes. Interest rates have shot up into the 4’s, but that’s still low! If you’re a child of the 80’s, you’ll remember that interest rates hit 18%. However, interest rates follow the rule of 10x. For every 1% increase, you can expect a 10% decrease in borrowing power or a 10% increase in your monthly mortgage payment. That’s huge. For example, if you take out a mortgage for 1 million dollars, you can expect a monthly payment to be somewhere around $5000 at today’s rates. If the interest rate goes up a point, that payment for the same amount is now $5500. Or, if you need to stay at a $5000 payment, now your purchasing power is only $900,000. The difference between a $900,000 home and a million dollar home is vast. Will this affect the market? Of course. Perhaps we’ll see less buyers competing for homes and less bidding up the price like we saw in 2021. Will there be a crash? Probably not. Prices may not even drop. They just won’t increase as much or as quickly and quite frankly, I’m ready for a more balanced market. Presenting 23 offers on a single family home is a lot of work and rejecting 22 broken hearts shatters my heart too. 

It’s important to talk about legislation. Bill 41 is a big one. It seeks to extend the minimum time for short term rentals (AirBnB, VRBO, etc) from 30 days to 180 days! The government is hoping this will solve our housing shortage crisis. It won’t. Most short term rentals are studios or 1 bedroom condos in Waikiki with no parking or luxury homes along Lanikai Beach that cost $3M or more. Bill 7 is an important one too. It allows for 3-4 times the number of units allowed on the same lot size. Think: all those old houses in urban Honolulu next to 3 story walk up apartments on teeny lots. Those are the ones this bill targets and developers are foaming at the mouth for these little nuggets. The caveat, however, is that they are to be priced at affordable rents. What we really need are more homes like Ho’opili and Koa Ridge, but where are we gonna get the land? This is why Hawaii has and always will be expensive. Land is precious and no one’s making more of it. 

What should you do in 2022? Owning a principal residence is a long game. Timing the market shouldn’t be your goal as a buyer. Buy when the time is right for you. If you’re an investor, that’s a different story. If you’re a seller, your timing is also most important, but with our housing crisis, you’ll almost never go wrong selling in Hawaii. And watch when Japan opens up again for travel. They’ll be back and they looooove Hawaii real estate. 

2022…I’m here for you. I like that much better than 2020 too. 

Safe Travel To Honolulu: A Simple Guide To Testing, Masks, and Quarantine

It’s been a year since the COVID-19 virus locked our worlds down. Now, the vaccine has made its way into the veins of many, cases are down, restaurants and bars are opening again, daylight savings time is in effect, and people want to travel. Traveling between states on the US Mainland is pretty much same ole, same ole plus mask wearing. Getting to Honolulu is a different story and navigating the government websites is same ole, same ole. It’s just as difficult as trying to pay your car registration, get married, and do I dare say – file for unemployment. (Insert the teeth bearing emoji here). After having just done it and as I prepare for my second trip to the mainland in under a month, I thought I’d break it down for you since it’s fresh in my mind. Hopefully it saves you a little time and frustration.

First, let’s talk about what’s different on the airplane. It’s standard across all airports and all airlines that masks are required. Alaska Airlines didn’t serve any food except for a cheese plate that you must order ahead of time. Otherwise, you’re not eating for the duration of the flight. The redeye between Honolulu and Seattle consisted of only 1 beverage service. My second flight between Seattle and Kansas City, MO was a morning flight and they served coffee and Biscoff cookies (my fave!). My mom and I sipped our coffees and talked story like two friends who hadn’t seen each other all year and then, the flight attendant came on the PA saying, “Ladies and gentleman, we’d like to remind you that as you enjoy your coffee, take a sip, put your mask back on. Take a sip, put your mask back on. Let’s protect each other.” Well shucks. So much for coffee talk. I later heard Hawaiian Airlines allows masks off during active eating and drinking. A friend of mine said, “Well, I guess I’ll just eat the whole flight.” Then again, Hawaii local people are known to fill our bags with snacks and do that anyway, so no change there. I will say this, I thought I was gonna hate wearing a mask on the plane, but I actually felt very comfortable. Wanna know why? I’m an open mouth sleeper. That redeye with a mask was the most restful overnight flight ever! My eyes shut, my head went back, and my mouth went open. I didn’t worry for a second that I might be breathing fire in the face of the person next to me. Also, my lips didn’t get chapped from breathing that cold, dry air and it kept my face warm. One other thing I quite enjoyed about COVID airplane travel: I paid $99 to upgrade my seat to premium class on Alaska Airlines. Not only do you get free drinks and extra legroom, but the middle seat is left open for extra social distancing. I don’t think they’re gonna do this forever, but I wish they would.

What’s a favorite mask for travel and otherwise? This one: Athleta Cloth Mask.

Let’s talk quarantine. I’m not incredibly well versed in this subject, but it’s my understanding that if you don’t get your negative test result prior to the departure of your last leg of travel, you must quarantine for 10 days. If you receive your negative test in the air or even a couple of days later, you don’t get to shave off those days. No test, no negative result, no go anywhere. Period.

Finally, let’s talk travel testing. If you Google “Hawaii travel testing” it will get you nowhere. God forbid you land on the State of Hawaii site which you have to dig through to finally get to the Safe Travels portal. I present to you, the magic link below. You’re welcome.

Click on the image to take you to the Safe Travels Portal

A few tips for you.

  1. Create your profile in advance. I did it from my phone and later found it to be much easier from a desktop for my husband. At the same time, you will use your phone to generate a QR code before boarding your flight to Honolulu, so pick whatever’s easiest. It will require you to create a password, so make sure you remember it.
  2. You’ll need your driver’s license, passport, or whatever official ID you use to travel as it will require you to input the ID number.
  3. Make sure your name is the same spelling and punctuation as what’s on your airline reservation.
  4. Wives, we do these things for our family, but it really is best that each person does it themself especially because they’ll be required to generate their own QR code on their own mobile device. C’mon hubbies. You got this!
  5. Enter your trip information in the TRIPS section. You’ll need all the departure and arrival information (flight number, time, airline, etc).
  6. Travel Testing: this gets tricky and once again, the information is tough to find. Below is a list of US Mainland approved providers. I used Walgreens on my way back from Missouri. The process is, you locate a provider in your area via the web. When you get to their site, you scroll until you find something that references COVID-19 testing. Walgreens requires an online registration. Again, make sure your name is the same as what’s on your travel registration.
    • American Family Care (AFC)+
    • American Samoa Department of Health+
    • Atlas Genomics+
    • Capstone Clinic+
    • Carbon Health
    • CityHealth Urgent Care
    • Clarity Lab Solutions+
    • CLEAR (ONLY Delta DL 480 and United UA 1158 flights from LAX)
    • Color
    • Commonwealth Healthcare Corporation+
    • Costco/AZOVA+
    • CVS Health (ONLY www.cvs.com/selfpaytesting, not a different CVS website or walk-in)
    • Discovery Health MD
    • DLS Guam
    • Guam Department of Public Health and Social Services
    • GoHealth Urgent Care*+
    • Kaiser Permanente (members only)University Medical Center of Southern Nevada+
    • UC San Diego Health
    • University of Washington Medicine+
    • Vault Health
    • Walgreens
    • WestPac Labs+
    • XpresCheck+
  7. Make an appointment for your pre-travel test 72 hours prior to the departure time of your last leg of travel to Honolulu. I left Missouri on Saturday afternoon. I tested on Friday morning at 9am. This was a little stressful as I didn’t get the results until I landed in Seattle. They’re supposed to get the results to you within 24 hours (if you choose that particular test, but it took a little over 24 hours). Also, test appointments aren’t the easiest to get. I recommend getting on it as soon as you get to your destination.
  8. The test: it’s easy. They give you the swab. You stick it in your nose and swirl it around for 15 seconds, place it in the vial (cotton side down), and return it to the pharmacy tech in the prescribed package. It was also free which I haven’t quite figured out why. I think it’s because I designated who my insurance provider is, but they didn’t ask me for my medical card so….I don’t know. Sorry.
  9. Then…you wait and you wonder if you have the virus, and then you pray you don’t have it, and you pray the results get to you in time. So much stress! Breathe.
  10. HEALTH QUESTIONNAIRE: You need to complete this 24 hours prior to departure. This is where that QR code is generated which you will share with the airline personnel.
  11. Results: they’re delivered via email and you’ll get a text alert that your results are in. Hallelujah! Download the results and upload to DOCUMENTS. It’s surprisingly very easy. The QR code links to your profile and the airline personnel will be able to access your results. You can, however, show the actual test results as well.
  12. The following airports offer the Pre-Clear Program at the gate. This allows you to show the QR code and get a wrist band which gets you past the yelling Honolulu personnel upon arrival (sorry, but it’s true. I wish our Honolulu airport people were nicer). If you don’t have the wrist band, apparently there’s a line you have to stand in to get cleared to leave the airport.
    • Austin-Bergstrom International Airport (AUS) – Available starting April 22
    • Boston Logan International Airport (BOS)
    • John F. Kennedy International Airport (JFK) 
    • Long Beach Airport (LGB)
    • Los Angeles International Airport (LAX) 
    • McCarran International Airport (LAS)
    • Norman Y. Mineta San Jose International Airport (SJC)
    • Oakland International Airport (OAK)
    • Ontario International Airport (ONT)
    • Orlando International Airport (MCO)
    • Phoenix International Airport (PHX)
    • Portland International Airport (PDX)
    • Sacramento International Airport (SMF)
    • San Diego International Airport (SAN)
    • San Francisco International Airport (SFO)
    • Seattle-Tacoma International Airport (SEA)
  13. Once you land in Honolulu, show your wrist band and you’re on your way! Honolulu takes COVID-19 very seriously, so be ready to wear your masks, wash your hands, and watch your distance, but you can have coffee talk. No need to sip and put your mask back on. Safe travels and aloha!