State Real Estate Market Outlook
Realty Market Outlook Hawaii State Profile - Spring 2006
Rapid home price growth fueled development
Home prices appreciated 23.8 percent during the year ending fourth quarter 2005, up from the prior quarter and well above the national average of 13 percent. Strength in the tourism and construction industries provide support for housing demand, but rising interest rates could dampen future price appreciation of the state’s already high-priced housing.
Permit issuance for 1-4 family residential units increased in 2005; meanwhile, multifamily permits declined slightly but remained near historical highs. Forecasts from Moody’s Economy.com suggest housing permit activity may decline during 2006, which could mute employment gains in the construction sector.
Innovative mortgages and investors may be influencing housing demand. Interest-only and negative amortization loans accounted for 40 percent of non-prime mortgage originations in Hawaii in the first 11 months of 2005. During the same period, investors and second-home purchasers accounted for 36 percent of Hawaii Alt-A mortgage originations.
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