Oahu Real Estate Market Insights report: 2017 Recap and 2018 Forecast

REAL ESTATE INSIGHTS REPORT 2018 SINGLE-FAMILY HOMES | 4 CONDOMINIUMS | 8 DEVELOPMENT | 12 FOUNDATION | 18THE “NEW” NORMAL CONTINUE TO RISE NEW PROJECTS WE PAY IT FORWARDWhy this market is different Condo inventory is on the More housing options 30 years of helping to improve than previous cycles rise—but so is competition on the horizon local communitiesFront Cover - Static

2,320 DIAMOND HEADTRANSACTIONS IN 2017 614 Kapahulu Avenue Honolulu, Hawaii 96815 (808) 735-4200 KAILUA 151 Hekili Street, #120 Kailua, Hawaii 96734 (808) 262-2727 KAPOLEI 91-579 Farrington Highway, #206 Kapolei, Hawaii 96707 (808) 690-9555 MILILANI 95-720 Lanikuhana Avenue, #120 Mililani, Hawaii 96789 (808) 625-7100 PEARLRIDGE 98-161 Kaonohi Street Aiea, Hawaii 96701 (808) 488-7700 MAUI 34 Wailea Gateway Place, #A-207 Wailea, Hawaii 96753 (808) 879-5200 EXECUTIVE TEAM Scott Higashi President & Chief Executive Officer Brian Stewart Chief Financial Officer Michelle Cheung Senior Vice President Technology, Marketing & Research Chad Takesue Senior Vice President Sales Bill Chee Founder

REAL ESTATE INSIGHTS REPORT 2018 03 FORECAST FOR 2018 $ INTEREST RATES 4.3% – 4.5%SINGLE-FAMILY HOMES CONDOMINIUMSSales Median Prices Sales Median Prices 5% 5% 8% 6%$798,000 $435,0002017 BY THE NUMBERS ALOHA, Sales of single-family homes (SFH) and condos increased by As Hawaii’s oldest and leading seven percent in 2017 – outpacing market expectations. locally-owned independent real estate firm, our trusted Median prices also rose last year, with an increase of three Neighborhood Experts have percent for SFH and five percent for condos. This moderate served Hawaii’s families since 1969. price growth—which has existed for years now—further underscores the stability of the current market. For nearly 50 years, Locations has helped more people buy or sellTHE OAHU REAL ESTATE MARKET IS EXPECTED their homes than any other realTO CONTINUE ITS STEADY RISE IN 2018. estate firm in the state.WHAT WILL 2018 BRING? We know you have many choices Strong demand will continue in 2018, while the supply of when it comes to buying or selling available homes is expected to remain insufficient in all but the your home, and we thank you for highest prices ranges. Sales and prices are expected to climb placing your trust in Locations. steadily and gradually, as low inventory will constrain both sales and sharp price increases. We know that you have many choices when it comes to buying New single-family home construction in West Oahu, coupled or selling your home, and we with new condo developments in Kaka’ako, will help to buoy thank you for placing your trust in sales. However, new inventory that becomes available in Locations and our industry-leading 2018 will be quickly absorbed by the market, and Months of sales professionals. Remaining Inventory (MRI) will remain low. To learn more about the values It is important to note that the overall Oahu market is made that drive us to deliver a best- up of several market areas and hundreds of neighborhoods, in-class client experience, visit each with their own market conditions and characteristics. LocationsHawaii.com/about-us Because each neighborhood is unique, consult your Locations REALTOR® for information on your specific market area or Mahalo, neighborhood of interest. Scott Higashi President & Chief Executive Officer

04 REAL ESTATE INSIGHTS REPORT 2018 SINGLE-FAMILY HOMES IN HIGH DEMANDMLS - 201718129 MLS - 201719290 MLS - 201724913

REAL ESTATE INSIGHTS REPORT 2018 05KEY INDICATORS With inventory at historic lows, combined with pent-up demand, Oahu’s single- family home (SFH) market continues its steady climb of the last several years. SFH inventory below $1.1 million is especially constrained, pushing prices up. For the fifth consecutive year, median prices reached an all-time high in 2017, peaking to a record price of $794,000 in June.Median Sales Price STRONG COMPETITION THE “NEW NORMAL?” Bid-ups measure the percentage of The current real estate market is behaving $760,000 sales bid up over the asking price. Bid- differently than any previous cycle. 3% ups are the primary contributing factor Bid-Ups for rising prices. The Oahu market is The past four Oahu real estate cycles 30.1% very competitive, with one in every three have been marked by five to seven years 1% homes bid up over asking price in 2017. of lower sales and flat prices, followed by Days on Market The greatest competition was in the three to five years of sharply increasing 18 $500,000 to $750,000 price range. sales and a strong upswing in price, 5% often with multiple years of double-digit BRISK SALES appreciation, before leveling off again. Days on Market (DOM) measures the number of days from when a property is A typical market cycle is also listed to when it goes into escrow. DOM characterized by an extremely remained very low in 2017, as days from competitive market environment with listing to offer acceptance dropped to strong demand factors during the just 18 days. DOM was particularly short upswing period – low Days on Market, for SFHs priced below $1 million. Homes an increase of bid-ups over asking price, priced above $1 million remained on declining inventory and increased sales. market a bit longer, as these homes attract a smaller pool of qualified buyers; The market has been quite competitive for however, more million-dollar-plus homes the past six years, as evidenced by strong sold in 2017 than the previous year. demand factors. At the same time, sales and prices have increased at moderate, NEW LISTINGS QUICKLY ABSORBED stable rates of about five percent each Absorption is measured in terms of year – a departure from the double-digit Months of Remaining Inventory (MRI), appreciation of previous cycles. or how quickly all available inventory would sell out based on the current The current low inventory also prevents rate of sales on Oahu. Six months of significant increases in the number of MRI is considered a balanced market. home sales, which has driven large price At 2.2 months, MRI was the lowest in increases in the past. A gradual increase more than a decade for SFHs in 2017, in inventory is likely in 2018. indicating a seller’s market.

06 REAL ESTATE INSIGHTS REPORT 2018 WHAT’S YOUR HOME WORTH?If you’ve owned a home for the last five years, you might The biggest percent increase in home values was inbe in for a big surprise. Leeward Oahu, where the average home purchased in 2012 gained more than $170,000 in home equity.Homeowners who have been in their homes since 2012have, on average, $133,000 in home equity, not including Homeowners looking to upgrade or expand their home, orthe amount they’ve repaid on their loans. While home even trade up to a new home, should find out the value ofequity is up in every neighborhood across the island, some their current home.neighborhoods are building equity at higher rates due toincreased competition and rising median prices. VisitLOCATIONSHAWAII.COM/HOMEVALUATOR or talk to your REALTOR® to get an estimate of your home’s worth.THE LOCATIONSHOME VALUATOR

REAL ESTATE INSIGHTS REPORT 2018 07 KAPOLEIOAHU’S SECOND CITY2017 MEDIAN SINGLE-FAMILY HOME PRICES$600K - $650K $650K - $750K $750K +WHO OWNS IN KAPOLEI? Comprised of eight neighborhoods - Kapolei Knolls, Malanai, 19% Kumu Iki, Aeloa, Kekuilani, Iwalani, Mehana and Kapolei Kai - Kapolei offers homeowners affordability, convenience and a 10% variety of housing types. 70% Median home prices in Kapolei have yet to top $1 million, but when they do, odds are that the Kapolei Knolls neighborhood will lead the way. Of Kapolei’s eight neighborhoods, only Kapolei Knolls - built in 1998 - saw median prices above $750,000 in 2017, putting homes there on par with Oahu’s overall median price. Homes in Kumu Iki (built in 1990) and Kekuilani (built in 1994) range between $600,000 - $650,000, while homes in Kapolei’s remaining five neighborhoods - Malanai (built in 1992), Aeloa (built in 1994), Iwalani (built in 1994), Kapolei Kai (built in 2002) and Mehana (built in 2011) – range from $650,000 to $750,000. OWNER-OCCUPIED HAWAII INVESTOR To learn more about Oahu’s Second City, visitMAINLAND INVESTOR FOREIGN INVESTOR LocationsHawaii.com/Kapolei

08 REAL ESTATE INSIGHTS REPORT 2018 CONDOMINIUMS CONTINUE TO RISE

REAL ESTATE INSIGHTS REPORT 2018 09MLS - 201723496 MLS - 201723950 MLS - 20121054Strong competition in the Oahu condo market continued in MIX OF SALES2017, with one in four condos selling for more than the asking BY BEDROOM TYPEprice — pushing up median prices to $410,000, hitting arecord high for the fifth year in a row. 10% 18%Rising prices, high bid-ups and falling Days on Market are allhallmarks of a competitive market. Competition was particularly 25%stiff for condos priced below $700,000.The number of active condo listings rose above the previousyear’s count in 2017. However, despite increased inventory,available condos for sale were quickly absorbed by the marketand Months of Remaining Inventory is still very low at 2.8 months.Moreover, half of all condo sellers received their asking price – or 45%more – in 2017, another hallmark of a competitive market. The lasttime half of all condos sold at or above listing price was towardthe peak of the last market cycle in 2005.Interestingly, bid-ups in more moderate condo price ranges STUDIO 1 BEDROOM 2 BEDROOM($500,000 - $1 million) decreased slightly, while bid-ups forcondos priced above $1 million dollars had the greatest increase. 3 BEDROOM OTHERSTRONG DEMAND FOR THREE-BEDROOM CONDOSWith three-bedroom condos and From listing to offer acceptance, three- These competitive market conditionstownhomes making up just 18 percent bedroom condos and townhomes had suggest that demand for larger condosof all condo sales in 2017, competition the shortest median DOM of all condo and townhomes will likely continue towas stiff for these larger units. types at just 17 days. These units also trend up in 2018. had the highest percentage of bid-ups, with one in three sold over asking price, compared to one in four for the overall condo market. CONDOMINIUM HIGHLIGHTS Median Sales Price Bid-Ups Days on Market $410,000 24.0% 18 5% 3% 10%

10 REAL ESTATE INSIGHTS REPORT 2018 North ShoreEw Be ch H w ii K i Kahuku North Shore Honolulu Haleiwa Ka‘ena Point Waialua Ka‘a‘awa Valley Wahiawa H3 Makaha H2 Kaka‘akoNavigating O‘ahu MililaniKapolei average travel time to Honolulu: 42 minutesMililani average travel time to Honolulu: 45 minutes Koa Pearl CityKaneohe average travel time to Honolulu: 29 minutes RidgeHawaii Kai average travel time to Honolulu: 33 minutes Pearl HarborThe Bus uses 519 buses to serve 110 routes H1 HNLHonolulu Rail Transit is projected to begin servicesin 2020 Ho‘opili Ewa BeachComing SoonKoa Ridge will add 3,500 single-family and multi-family homes by 2029.Ho‘opili will add 11,750 single-family homes, duplexes and townhomes by 2026.Kaka‘ako will have added 4,100 total units since 2017, within the next two years.

REAL ESTATE INSIGHTS REPORT 2018 11 YOUR TRUSTED NEIGHBORHOOD EXPERT SINCE 1969 What makes a Locations Neighborhood Expert? Neighborhood Experts know more than just the median home prices and number of homes sold in a particular neighborhood (although they do know those statistics and plenty more). Backed by our dedicated Market Research Department, our agents are armed with nearly 50 years of neighborhood-specific real estate data. Neighborhood Experts know what makes each of Oahu's 365 neighborhoods unique. They know where families gather on the weekends, where to find the best local grinds and where to catch the best waves. You can trust our Neighborhood Experts to know your morning-drive time to work, the best schools in your area and even where the roosters crow at 4 a.m., so you can rest easy knowing that you've found the right neighborhood for you and family. Real Estate Insights Neighborhood Expert Recommendations Military Bases Parks & Golf Courses Kane‘ohe Kailua Lucky We Live Hawaii Waimanalo63 Ka‘ena Point Hike out to view albatross and other native 61 birds. If you’re lucky, you may spy monk seals or whales, too. Hawaii Kai Waialua Snap a sunflower selfie at the DuPont Pioneer farm during the fall season.Kahala Wahiawa Stroll through Dole Plantation’s 2.5-mile Pineapple Garden Maze, the world’s largest botanical maze featuring 14,000 native plants. North Shore Surf the legendary Banzai Pipeline (or just watch the pros from the safety of Ehukai Beach). Kahuku Garlic butter or coconut tempura, from a shack or a truck, there’s something for every fresh-shrimp lover on the North Shore. Ka‘a‘awa Valley More than 50 of Hollywood’s biggest blockbusters were filmed here, earning it the nickname “Hawaii’s Backlot.” Kaneohe Paddle out to this bar and you’ll find a di erent kind of watering hole. From snorkeling to sunbathing, the Kaneohe sandbar is a favorite gathering spot for locals and honus alike. Hawaii Kai Let your four-legged friends run free at the Hawaii Kai dog park. Shopping at your favorite wholesale grocery store is no problem when you travel by boat. Honolulu Take in a concert, go for a jog or shoot some hoops at Kapi‘olani Park, Hawaii’s largest public park. To learn more about Oahu’s unique neighborhoods, visit LOCATIONSHAWAII.COM/NEIGHBORHOODS

12 REAL ESTATE INSIGHTS REPORT 2018NEW PROJECTS OFFER HOMEOWNERSMORE CHOICESHO’OPILI KOA RIDGE D.R. Horton’s newest master-planned community in West Oahu, Developer Castle & Cooke broke ground in late 2017 on its Ho’opili, is adding 11,750 homes to the Ewa Plain over the 3,500-home planned community, Koa Ridge, located between next two decades. Once complete, Ho‘opili will have seven Mililani and Waipio. The entire project is expected to be community and recreation centers, more than 200 acres of completed within 20 years. commercial farms and community gardens, and up to three million square feet of shopping and dining options. Additionally, Koa Ridge will offer a variety of housing styles, including three rail transit stations and five public schools within walking multifamily homes. Thirty percent of the homes (1,050) will be distance of many of its homes have been proposed. affordable for families earning between 80 percent and 120 percent of the area median income. Phase 1 of Ho’opili, which includes the communities of Ha’akea and Haloa, is currently under construction, with some homes Plans for the completed community include parks, gathering already completed. Both communities offer walking and biking spaces, an elementary school and more—all connected by paths, a neighborhood park, and proximity to the first future rail beautifully landscaped walking and bicycling paths. transit station, the Kroc Center, Ka Makana Ali‘i shopping center and UH-West Oahu. With a mix of three- and four-bedroom The first phase of Koa Ridge, which will include a total of 170 single-family homes, Ha’akea offers many sought-after home market-price single-family homes, row homes and affordable features, such as parking for up to four cars, gas ranges, walk-in multifamily units, is expected to be completed in 2019. closets and split air conditioning. Homeowners can also opt to include an Accessory Dwelling Unit (ADU) on their property.Haloa offers a mix of two- and three- bedroom market-priced townhomes and FLEX homes, as well as affordabletownhomes and flats. FLEX homes are a unique conceptthat that allow for live-work space within the home, allowingresidents to use a portion of their home for a commercialspace, such as a salon, a traditional home office or even anextended-family suite.

REAL ESTATE INSIGHTS REPORT 2018 13 THE URBAN CORE COMES TO LIFE KEAUHOU PLACEFour new high-profile condominium PROJECT DEVELOPER # OF STATUS COMPLETIONprojects were added to Honolulu’s urban UNITS DATEcore in 2017— Keauhou Place, 801 South Keauhou Place Stanford Carr CompleteStreet B, Park Lane Ala Moana and Development, LLC 423 2017Anaha—for a total of 1,365 units. 801 South Downtown Capital, LLC 410 Complete 2017The tremendous growth in the Kaka’ako Street B 2017area—which stretches from Punchbowl Kobayashi Group and 2017to Piikoi Street and King Street to Ala Park Lane The MacNaughton Group and 215 Sales Underway 2018Moana Boulevard—began to take 2019shape more than a decade ago with BlackSand Capital 2019the addition of the high-end Hokua and 2019Koolani condominium projects. Anaha The Howard Hughes 317 Sales Underway CorporationSince 2014, Kaka’ako added ninenew condo projects, resulting in Kapiolani SamKoo Pacific, LLC Undermore than 3,250 homes – including Residence 485 Construction /some affordable and reserved units. The Howard HughesHomeowners and investors responded Ke Kilohana Corporation Sold Outenthusiastically to the new constructionand median prices steadily increased Ae‘o The Howard Hughes Underover the past eight years, reaching a Corporation 424 Construction /record high in 2017. Sales Underway Under 466 Construction / Sales Underway The Block at MJF Development 153 Sales Underway 803 Waimanu Corporation Gateway Towers The Howard Hughes 236 Sales Underway 2020 Corporation ‘A‘ali‘i The Howard Hughes 751 Sales Underway 2020 Corporation

14 REAL ESTATE INSIGHTS REPORT 2018 RISING RENTS IS OWNING BETTER?WITH RENTS ON THE RISE, HOMEOWNERSHIPOFFERS A WAY TO BUILD LONG-TERM WEALTHDid you know that average rent prices on Oahu have WE’RE IN HISTORIC TIMESdoubled over the past ten years? With 43 percent of Today, there is often very little difference between a typicalhouseholds currently renting their home – and six in 10 rent payment and a typical mortgage payment. However,renters spending more than 30 percent of their income on investing in a home will build equity over time as the homerent – it’s no wonder that Honolulu is one of the nation’s appreciates. Paying rent, on the other hand, will not contributemost expensive cities for renters. to your long-term wealth.The average fair-market rent for a two-bedroom unit in There are also additional tax benefits to homeownership.Honolulu in 2017 was $2,253. Assuming no rent increases, Homeownership, especially in Hawaii, builds real wealth.a renter will have paid more than $135,180 in just five yearstoward someone else’s mortgage. OWN VS. RENT: OAHU CONDOS LOAN PAYMENT RENT + MAINTENENCE FEE$3000 $2,252 $2,253 $2,672 $2,690$2500$2000 $1,835 $1,306 3 BEDROOM$1500 $1,340 $1,306 1 BEDROOM 2 BEDROOM$1000 $500 STUDIO $0

REAL ESTATE INSIGHTS REPORT 2018 15 YOUR MILITARY EXPERTS Home to the fourth-largest military workforce in the United States, Oahu offers many advantages for military homeowners. Even if a military service member’s stay on Oahu is only for a few years, investing in a condominium or house may make sound financial sense due to low interest rates, VA loan options and the Basic Allowance for Housing. To find a home that’s right for you, convenient to base, check out our Military Base Home Search. We’ve got everything from Schofield Barracks to Marine Corps Base Hawaii covered.LOCATIONSHAWAII.COM/MILITARY

16 REAL ESTATE INSIGHTS REPORT 2018 LUXURYLUXURY MARKET STRENGTHENS

REAL ESTATE INSIGHTS REPORT 2018 17MLS - 201714892 MLS - 201717641 MLS - 2017144042017 TOP LUXURY NEIGHBORHOODS Sales of single-family homes priced between $2 million and $5 million KAHALA LANIKAI 2017 was a stronger year for Oahu’s increased in 2017. In particular, homes luxury real estate market than the priced between $4 million and $5 million SALES: SALES: previous year. Median prices rose in nearly doubled, from eight in 2016 to 15 56 26 most luxury neighborhoods, while Days in 2017. Sales of homes priced above $5 MEDIAN: MEDIAN: on Market fell in most luxury markets – million, however, were slightly lower. $2,557,500 $2,485,500 especially for home prices above $5 million – compared to 2016. Oahu luxury home trends include aHAWAII LOA DIAMOND return to traditional Hawaiian-style RIDGE HEAD homes, with an emphasis on indoor- outdoor living, lush landscaping and SALES: SALES: ease of lifestyle. 21 20 MEDIAN: MEDIAN: $2,500,000 $2,375,000WILL LUXURY CONDOS TOP In 2017, resales of condos priced at $1 million or more rose by 20 TRADITIONAL MANSIONS? percent, while Months of Remaining Inventory fell by four months to just over 12 months. Despite unprecedented additions to Oahu’s luxury condo inventory over the past few years, demand is still evident and the pace of resales continues to increase. Many luxury condo buyers are local residents, drawn from traditional high-end, single-family home enclaves to the convenience, amenities and prestige that new luxury condos afford. The extent of this migration of luxury homeowners from single-family residences to condos remains to be seen, but it’s safe to say that many luxury homeowners will be moving up – literally – in 2018.

REAL ESTATE INSIGHTS REPORT 2018PROPERTY MANAGEMENT SERVICESFounded in 1987, Locations Property Management is the LOCATIONS PROPERTYlargest individual rental market management company in MANAGEMENT FAST FACTSthe state of Hawaii and the market leader in the propertymanagement industry. • 3,500+ UNITS MANAGEDIn addition to providing property management services to • 2,000+ COMPLIANCE HOUSING UNITS – ONEindividual homeowners and investors, Locations Property OF THE LEADING TOOLS FOR COMBATINGManagement also services major institutions such as HOMELESSNESS IN HAWAIIKamehameha Schools, First Hawaiian Bank, Hawaii CommunityDevelopment Authority, Kaiser Permanente Hawaii and the City • 65 FULL-TIME EMPLOYEES& County of Honolulu, expertly managing their housing projects. • ONE OF ONLY TWO COMPANIES IN HAWAII TOLocations is committed to being part of the solution to Oahu’s HANDLE WORKFORCE-RENTAL HOUSINGaffordable housing shortage by managing a wide breadthof affordable rentals. The property management division • THE ONLY TOP 10 REAL ESTATE SALES BROKERAGEhas tripled in size in the last five years, making Locations IN THE STATE TO MANAGE AFFORDABLE HOUSINGthe largest firm on Oahu to manage affordable housing.Locations Property Management is uniquely positioned to • TO LEARN MORE, VISIT LOCATIONSRENTALS.COMnavigate through a myriad of compliance issues and barriersto entry in the affordable housing arena. FINANCING YOUR FUTUREIMPROVED LOAN OPTIONS PUT HOME EQUITY TO WORK INTEREST RATES TO HOLD STEADYThe days of needing a 20 percent With interest rates at near-historic lows Mortgage rates hovered around fourdown payment to qualify for a home and rising home values, now is an percent in 2017. The Federal Reserveloan are long gone. Fortunately, excellent time for homeowners to tap Bank raised bank rates three timeshomeowners today have several home their home’s equity to move up the real last year, and it intends to bring ratesloan options to help make the dream estate ladder, upgrade their current above two percent by the end of 2018.of homeownership a reality. Today’s home or cover other expenses such However, while rising bank rates directlyhome loan options are much more as college tuition. Common “cash-out” affect short-term loans, they will notflexible than even a few years ago. refinance options include: necessarily affect mortgage rates. RatesConventional home loans allow for o Conventional: Up to 80% of home’s are expected to remain in the low- toa down payment of as little as three current value mid- four-percent range in 2018.percent. Veterans Affairs (VA) loans and o Federal Housing Administration (FHA): United States Department of Agriculture Up to 85% of home’s current value(USDA) loans require no down payment. o VA: Up to 100% of home’s current valueCertain restrictions may apply. Home Loans llc|HawaiiFOR MORE INFORMATION ABOUT HOME FINANCING, CONTACT YOUR LOCATIONS REALTOR® OR VISIT COMPASSHAWAII.COM

REAL ESTATE INSIGHTS REPORT 2018 19 LOCATIONS FOUNDATIONWE PAY IT FORWARDFor nearly 30 years, Locations agents BY THE NUMBERSand staff have worked to improve local • 100+ NONPROFITS SUPPORTEDcommunities and help change thelives of Hawaii’s children and families • 200+ ACTIVE VOLUNTEERSthrough our charitable nonprofitLocations Foundation.Established in 1988 by Locations founder • 2,000 HOURS VOLUNTEERED Bill Chee, the Foundation offers our EACH YEARagents and employees a trusted way togive back to our communities. • 26TH MOST CHARITABLE COMPANY IN HAWAII IN 2017As a company, Locations donates morethan 2,000 volunteer hours to serviceprojects across our island communitieseach year. A portion of our profits alsogo to local charitable causes—morethan $300,000 in 2017 alone!HUGS FOUNDATION MOVIE DAY BACKPACK TO SCHOOL

LocationsHawaii.comDIAMOND HEAD KAILUA(808) 735.4200 (808) 262.2727PEARLRIDGE KAPOLEI(808) 488.7700 (808) 690.9555MILILANI MAUI(808) 488.7700 (808) 879.5200