Sep 25, 2010

CASE STUDY: 48% of Homes Sold (June 2010) contain a 2nd unit

Accessory Apartments are quite common in Honolulu. That it cannot be legally rented or occupied as an independent living unit has not been much of a deterrent. We conducted an analysis of MLS data for Active listings in metro Honolulu in June 2010. Our subsequent analysis of SOLD properties over the same period shows that 48% (or 14 out of 29 sold listings) of every single-family home sold in June 2010 in the metro Honolulu region, contained a living area that was described as a 2nd unit.

Typical descriptions in the Listing Agent's own words:
  • 2 Bedroom, bath,living rm and 2nd kitchen on 1st floor with separate entrance for extended family living
  • separate entries upstairs and downstairs. for multi-generational living. Separate Gas Meters. Building Style: Duplex
  • 3 BDRM, 1 BTH / STUDIO, 1 BHT - DOWNSTAIRS AND 3 BDRM, 1 BTH-UPSTAIRS. Building Style: Duplex
  • 3/1 up & 2/1 dowm. Building Style: Duplex
  • It includes a rompus room that can be used as a separate living area. Bathroom in rompus room is not permitted.
  • One bedroom downstairs w/separate entry,
  • great for multi-family living. An additional kitchenette area, a separate master bedroom
The purpose of this information is not to vilify Realtors, who are simply describing an  existing condition. Instead, this research suggests Buyers have a strong preference for residential properties that contain a 2nd unit.

Realtors recognize that Buyers are attracted to a home that is already pre-configured to accommodate an income producing rental space (to help them afford the mortgage payments). In other words, having a rental unit (legal or not) is a selling point that the marketplace perceives as increasing property value.

One previous study indicated only 9.5% of single-family homes sold in 2009 appeared to contain a separate living area. A second study that examined the publicly available comments realtors used to describe the home found 32% of all active for sale listings in June 2010 contained a potential 2nd unit. Our current study looked at different fields (ie. public comments vs comments avail only to realtors). Also, the curent study has a very small sample size (14 out of 29 homes total). Therefore, further research is indicated.