I realized that for months I’ve used the term Median Price and assumed that readers knew what it meant.  In light of recent reports and comments, a further explanation is necessary.

First, the technical explanation.  Median is to a mathematical term describing a midpoint. When applied to prices, the median is the price at which there are an equal number of prices above and below. Using median prices for reporting sales on O`ahu eliminates the effect of very high-priced homes by making expensive sales just another point above the median.

Now let’s talk logic.  The median price accurately portrays what’s being paid for real estate, but doesn’t tell you anything about individual properties. As an extreme example, let’s assume every O`ahu property sold in a month was on the Leeward coast, where values are lower.  If the next month, sales shifted to the east side, the median price would be higher, even with no change in individual property values, since these properties are more expensive. The opposite would also be true, that is, more west sales and fewer east sales lower the O`ahu median.

The conclusion is that the median price is of limited use for estimating the value of an individual property, so what good is it?  It is actually a measuring stick of the pocketbook of buyers, and by that, I mean, it tells you what buyers are spending. It lets you know what prices are being paid, but nothing about what is being purchased. If all properties were exactly the same, the median would be a true measure of value but, since this isn’t the case, other factors like size, location, view, property features, etc., also come into play.

Can the median price be increasing when valuations are decreasing? YES. Can values be increasing (or decreasing) and the median price is staying the same? YES.

So what’s happening to MY property?  The answer is found by looking at comparables, not overall medians. A comparable is any property similar to yours that, with adjustments, can be used to determine the value of your property. An example would be the sale of a duplicate of your house, in the same location, but it has an extra bathroom.  A proper estimate of the value of your property would be this known sale price, but deducting the estimated value of the extra bathroom.

This process is exactly what a professional REALTOR® or, more formally, an appraiser uses to estimate a value for a particular property and they do not use published median prices.

The sales volume and prices for the second quarter, which ended this past Monday, June 30, have been announced by the Honolulu Board of REALTORS®. As was expected, the number of sales declined, but the median prices are still holding steady.

Sales of 740 single-family homes and 1,121 condominiums were recorded in the April-to-June period. Compared to the same time period last year, the 2008 sales figures show a decline of 28.6% single-family dwellings and a 30.7% decrease for condos. When these second quarter sales numbers are compared to the first quarter, we see increases of 10.0% and 8.1%, respectively.

Pricewise, O`ahu residential properties seem to be holding their value, unlike the drastic negative conditions for the housing market on the Mainland. The second quarter median prices were $636,000 for single-family homes and $330,000 for condominiums. The comparison between last year and this shows a decline for single-family of 4.4% and an increase for condominiums of 0.6%. And, we’re comparing this quarter’s single-family median to the peak which occurred exactly one year ago, at $665,000. Note that the second quarter 2007 price was more than $25,000 higher than in any other quarter, either before or after, due to the larger number of expensive homes that sold at that time. Also note that the $636,000 figure was higher than in the past three quarters and the $330,000 for condominiums was a peak that ties for the record.

The dollar volume of sales for the second quarter was below the $1 billion mark, at $997 million, for the second time in a row. A year ago, the dollar volume was almost $1.5 billion for the same quarter.

Here is a table of the second quarter median prices by neighborhood:

NEIGHBORHOOD     SINGLE-FAMILY HOMES      CONDO/APT/TWNHS
Metro Oahu                            $ 710,000                                   $ 325,000
Diamond Head                          900,000                                      425,300
Hawaii Kai                                 870,000                                       557,500
Kailua                                         785,000                                       415,000
Kaneohe                                     690,000                                       400,000
North Shore                               617,500                                        300,000
Central Oahu                             626,800                                       319,000
Leeward Coast                           393,000                                       170,000
Ewa Plain                                    469,200                                       315,000
Makakilo                                     630,000                                       302,000
Waipahu                                      582,500                                       275,000
Pearl City                                     637,500                                       298,500

For the latest information about recent trends in the housing market, check out the information available on the Honolulu Board of REALTORS® website www.HiCentral.com or contact a REALTOR® in your area.

The O’ahu housing sales statistics for June were released today by the Honolulu Board of REALTORS® (HBR). They show that sales continue to decline, but prices have been staying in a narrow range.

HBR reported that in June, there were sales of 232 single-family homes and 355 condominiums. These sales were declines from a year ago of 31.4% and 35.1% for single-family homes and condominiums. For the first six months of this year, there have been 1,413 and 2,158 residential sales, respectively, compared to 1,902 and 2,978 sales for the same time in 2007. The year-to-date 2008 figures are decreases in the number of sales of 25.7% and 27.5%, respectively.

Median prices remain strong, with single-family homes going for $625,000 and $327,500 for condominiums. These prices both show decreases from last year, but only by 8.8% and 1.9%, respectively, and don’t forget that last June the median price for a single-family home hit it’s all-time peak of $685,000.

For the entire first half of this year, the median prices have been $629,000 and $330,000, respectively. The median price of a single-family home has decreased by 2.5%, but the condominium price has increased sice the same time period a year ago by 1.5%.

Dollar volume has substantially decreased from last year to this. In the first half of 2007, the housing market generated $2.64 billion in residential sales, but this has shrunk by 25.4% to $1.97 billion this year.

Complete information will appear in the newspaper tomorrow morning and will be available on the HBR website.

At the end of its two-day meeting today, the US Federal Reserve governors announced that there would be no change in interest rates. So, the federal funds rate will remain at 2.0%.

The Fed sees inflationary risks for the economy and will probably start increasing rates as soon as their next meeting in August.

This means that there should be no change in mortgage rates in the near term.

The Hawaii Association of REALTORS® (HAR) is seeking nominations for the 2008 REALTOR® of the Year award, which honors individuals who have contributed the most to the advancement of the profession and the community in the past year.

It’s up to REALTORS® to help decide who will be our top volunteer for the year. If you know someone who is a strong candidate for REALTOR® of the Year, please complete and submit a candidate application form available on the HAR homepage.

Nominations must be received in the HAR office no later than August 1. Fax forms to the HAR office at (808) 737-4977. For questions, please email dmotohiro@hawaiirealtors.com.