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Real Estate Indicators

Economic drivers relating to the real estate industry

Real Estate Indicators Definitions

Median Resale Price: Median prices for sales of existing single-family homes and condominiums are two of the most important series in evaluating real estate conditions.  Home prices tend to lag construction activity in both directions.  For example, falling prices indicate a situation where existing housing stocks are able to meet or exceed demand, discouraging investment in further new home construction.  Median prices are more useful in measuring overall market conditions than average prices because they are less likely to be distorted by a few extremely high or low sales, and come closer to describing the typical home sale.

For example, suppose there are five condominiums that sell for $200,000 and one that sells for $2,000,000.  The average condo price for the six units in that scenario is $500,000, which is not very close to any of the condos actually sold.  The average in this case is being driven up by the single luxury condo outlier that is not like the rest of the units that were sold.  By contrast, the median condo price for these six units would be $200,000, which gives us a better idea of the typical unit sold in this market. 

Data Source: Prudential Locations LLC
Link: Oahu and Maui Real Estate Reports  (Requires Registration)
Additional Links: Honolulu Board of Realtors / Realtors Association of Maui / Kauai Board of Realtors / Hawaii Island Board of Realtors Newsletter

Volume Of Resales: These indicators measure the number of existing single family homes and condominiums that were sold  during the reference period.  Volume of resales measures are important to consider for two reasons.  First, the number of transactions in a period can affect the reliability of price data.  Outliers and unusual transactions will have a larger influence on median prices when there are fewer transactions.  Second, comparing resales volume with the available inventory of homes or condos provides useful information about how active real estate markets. 

Data Source: Prudential Locations LLC
Link: Oahu and Maui Real Estate Reports  (Requires Registration)
Additional Links: Honolulu Board of Realtors / Realtors Association of Maui / Kauai Board of Realtors / Hawaii Island Board of Realtors Newsletter

Housing Affordability Index: The housing affordability index compares the price of an “affordable” mortgage to the prevailing median single family home and condominium prices.  An index value of 100 means the maximum affordable mortgage for a family with the median income is large enough to purchase a home or condo at the current median price.  The methods and formulas used by UHERO to calculate the Hawaii indexes are similar to those used by the National Association of Realtors in their national indexes.

Source: UHERO
Link: Housing Affordability Methodology- from the National Association of Realtors (NAR) 
Additional Link: Formulas Used by NAR