As many of you looking for homes in West Hawaii are aware, available homes in an “affordable” range (under $450k for a single family home or $300k for a condo) are extremely lacking. From my research, it appears that people are pulling money out of the stock market in West Coast markets and putting the funds into real estate, driving prices up in the housing market, which we are seeing a spill over here in Hawaii.
Good news is that the “Snow Bird Market” wraps up in March and we usually see more homeowners or investors who have to sell work with pricing to get the house off the market. In fact, that may already be in effect now, as Altos Research, the real time data stats company reported that 39% of the available homes on the market in Kailua Kona are experiencing price decreases.
If you are unfamiliar with the cycle of the West Hawaii housing market, sellers usually start preparing their homes for sale in November and get them on the market during the holidays to take advantage of the Christmas traffic and then continue to place homes on the market in January, as retirees from the mainland come to spend a few months, with many deciding to make the island either a permanent home or a part-time home/part-time investment. Then as tourism sags into April, there is a lull, until summer, but it never is as “hot” as it is during the Christmas holidays. (Funny how that happens when people come out of the cold and get their bodies all nice and toasty on a beach and then the prospect of freezing again encourages them to take a look at the homes on the market in Hawaii.)
Clearly, the Big Island is becoming a popular place to buy as in South Kohala sales volume increased 50% year over year and was up 71% over last year in the first three months of 2018. Land sales in South Kohala increased a whopping 685% from 1.6 million in February 2017 to 12.5 million year over year according to data from the Hawaii Information Service. Land sales also increased 29% island wide year to date.
In Kailua-Kona for condos, the number sold in 2017 year to date was 67, but in 2018 only 53 have been sold. The year to date median price for 2017 in North Kona was $350,000 and for 2018 year to date the median price was $312,500 at the end of February 2018. In South Kohala, the median price for a condo was $497,000 in February 2018, a 7.46% increase year over year from $462,500 in February 2017.
LUVA Realtor Lance Owens and President of the West Hawaii Association of Realtors states, “Having been a Realtor here for the past 14 years, and watching Hawaii real estate for 30 years, you need to be able to read between the lines. I have several buyers in the market for homes that are under the $500,000 range or under $300,000 in condos, and the lack of inventory is terrible, so you need to know that when looking at these numbers. For single family homes in North Kona the number sold in 2017 year to date was 70 and in 2018, it was 63. The median price in 2017 was $629,000 and in 2018 the median price was $560,000. That’s an <-11%> decrease, and that is not what is happening in real life, Owen explained, “There is no way you could buy that home that sold last year at $629,000 for $569,000 today, it’s just not going to happen.”
What IS happening is that fewer homes are being sold, so it may look like there is a drop in people buying homes..well, the story is that there is a LOT of demand, just not enough homes for sale.
“Part of the problem is, there is no inventory in that price point, and people are having to switch to condos and some are looking at vacant land now”, Owen concluded.
In North Kona, volume for residential sales was a bit lower than this time last year, but vacant land sales were up 33%. Many people we have spoken to about buying a home in West Hawaii have expressed their desire to build their own homes after being priced out of the single family home market.
Both Lance and I sat down for our “Big Island Real Estate Minute” to discuss buying condos in West Hawaii if purchasing a single family home is not an option financially for you right now.
I also spoke to a representative for Honsador (video) about buying a pre-designed home, so if you want to buy land, you can go to them or HPM Building to get designs, help with building permits, and suggestions for a contractor.
Lance has land deals available now and we can also place you on a listing alert for homes as they come on the market in your price and geographical range. Sign up here and please let Lance you heard it from 365Kona!