Oahu real estate inventory drops to 4 year low

Over the last month I've been working with 5 different buyers looking for homes in several areas of Oahu - Kailua, Kaneohe, Hawaii Kai, Mililani, Honolulu, and Ewa Beach.  The problem is, there is very little for sale.  As of November 1st, there were 1282 homes for sale, which is 4.6 months of inventory.  To make matters harder (not worse really) most of them are over $1million. 

For properties under $1million, the inventory is only about 3.7 months remaining. Just one year ago, we had 9.8 months of inventory, 2107 homes, almost double.  That same time last year, There was an average of 8.3 months of inventory of condos for sale, and now there is about 3.5! 

Here is the most surprising part - the median price has remained about the same since 2005!  In October of each year from 2005, the median price was $620k, $645k, $655k, $625k, and today, $605k.  Early this year, we saw a huge drop to $539,500, but it quickly recovered to $600k by March. 

So what's going on? Why is Oahu real estate fairing so much better than everywhere else in the country?  Well I could write hundreds of pages on this topic, which I have already done on my Hawaii real estate site, but here are the highlights:

1. Most people in Hawaii did not take risks with Option Arms or Interest only Arms.  The vast majority of loans were 30 year fixed loans, so there was very little fallout from the mortgage crisis. (Source - Wells Fargo Hawaii Senior LO Tim O'Leary)
2. It's an island.  There is simply nowhere to build except in Kapolei, and there are not enough homes overall on the island, especially in an afforable range, meaning about $400k in Hawaii.
3. People in Hawaii tend to buy and hold for a LONG time.  I've had clients who have had a house in their family for 50-80 years before they sold it.  People tend to pass their properties on to their kids, because land is so valuable here.  Selling is more expensive than just passing it on. 
4. Hawaii is a destination for many, not a stopover.  What I mean is, a lot of retirees end up here and hold their property forever.  We don't have as many people shuffling around trying to get a bigger better house as California and Arizona.
5. Money.  Tons and tons of money.  We have more millionaires per capita than most states. According to the Phoenix Affluent Market report, Hawaii is #1 in the nation for millionaires per capita, at 6.1%. People with money don't need to sell in a down market. They are less effected by stock market moves, government bailouts, and the wacky fiscal decisions of our government. Unemployment for them means they have laid off their employees, and they drive a Mercedes S class instead of the bulletproof AMG. 
6. In mid to lower income Hawaii families, multi generational living is common.  I've seen a lot of grandparents, cousins, uncles, kids, all living together in a big compound style house.  Sometimes a property will have 7-10 bedrooms, over 4000sqft of living space, with everybody pitching in.  The social and family benefits are huge, but the financial benefit is the one that helps real estate here.  If you have your income, your brother in law, and your mom and dad's, all paying one big mortgage, it's easier to hang on through the economic bumps that come your way.  It's hard to overstate how common this is here.  In some neighborhoods, it's hard to find a house that doesn't have multi generations living in it. 

I could go on for pages, but in the end, the result is that inventory is now lower than it was in 2005, and even though sales have dropped quite a bit, they haven't dropped enough to effect our market very much. 

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