Halii Kai Market Update – Developer and Short Sales Dominate

Halii Kai, the oceanfront condominium enclave at the Waikoloa Beach Resort is a specialty of mine. Since I worked for the developer Centex selling pre-construction, I know first-hand the quality of construction. And I know the quality of the community, since so many of the owners are clients and friends. There’s something about having an oceanfront owner’s club, with its own chef and celebrity bartender, that makes this condo project a “community” in more than just developer-speak.

Hali’i Kai’s Ocean Club Bar & Grill creates a sense of community

Values at Halii Kai Enhanced by Oceanfront Row

A little bit of Halii Kai history. The project broke ground in 2005 at the height of the real estate market. The developer very wisely chose to start construction and sales from the oceanfront back. Perhaps this was a matter of sheer luck more than foresight, but what it means is that they were able to pay off their bank loan by selling the most valuable units at peak prices, and now can afford to be competitive with current market conditions on their remaining inventory, which for the most part is in the Coconut Grove (mountain and garden view condos closest to the entrance gate).

Not that owning in the Coconut Grove is a bad thing. The appraiser’s principle of progression means that the value of a lesser property is enhanced by its proximity to properties of higher value. Thus a unit in Halii Kai’s Coconut Grove will natural tend to be priced higher than a unit a few hundred yards away in the Waikoloa Colony Villas, which is not an oceanfront project Remember there are oceanfront buildings with floor plans identical to those having garden/mountain views at Halii Kai.

That oceanfront club and scarcity value kept developer sales dripping along during 2009, even though overall the market was weak that year. From 13 sales in the first quarter of 2008, they dropped to 3 developer sales in the first quarter of 2009..but they recorded 4 additional sales in the second half of the year, despite the first two Halii Kai foreclosure sales grabbing the headlines.

2010: Hot Market, Mostly Distress and Developer Sales

In the first quarter of 2010, sellers who had been holding out could no longer hold on, and short sales began dominating the resale market. To be more precise, lots of short sales got offers, but given the length of the process none of them actually sold in the first quarter.

When the developer finally announced their price reductions at the end of March, they landed an immediate sale and regained their momentum. The only other sale in the first quarter of 2010 was a spectacular exception to the developer and distress sales: an oceanfront 2-bedroom with maybe the best view of any Halii Kai condo, which sold for $1,395,000 (disclosure: both seller and buyer represented by Hawaii Life). The seller sold at a substantial loss, especially considering his investment in upgrades and furnishings, and yet could only be pleased given that an REO in the same building sold months earlier for $814,995.

With TWO more closing today (July 15th), a total of 13 Halii Kai condos have sold so far this year:

• eight developer sales;
• three resales on the oceanfront including the sale mentioned in the previous paragraph,an REO (foreclosure) and a short sale;
• and two short sales of the larger 2-bedroom floor plan that seems to be the most popular this year.

There are more sales still in progress: six Halii Kai condos with offers on them, of which four are short sales and two are developer.

Today’s closed short sale has golf course but no ocean view, and sold for only $399,000, the lowest ever for this floor plan! With the most recent developer sales in the Coconut Grove at $479,000 for this floor plan and a sale today at $400,000 for the smaller 2 bedroom, this is one of those rare deals for the lucky buyer. Inside scoop says the lender approved the deal months ago before the recent pick up in sales, but legal wrangling held up the closing. This is another one, like that first REO 16C, that will have prospective buyers asking “can I have one of those?”

Any bargains left?

With the high demand so far this year for units at distress sale pricing, there are only 4 active short sale listings at present, ranging in price from $369,900 for the smallest floor plan in the Coconut Grove, to almost $1.7 million for the largest on the oceanfront. Three out of the four have upcoming auction dates, and may end up as bank-owned properties.

Nearby Kolea is a bit ahead of the foreclosure curve and there we already see a split market, with distress sales significantly lower than the non-distress sales, which are in turn still way below what sellers paid at the peak. I don’t have a crystal ball, but that’s the most likely scenario to play out at Halii Kai going forward. In that case, here is my best buy tip: there are Halii Kai ocean view listings which are not short sales, but priced competitively with what little is left of the price-reduced developer ocean view inventory. I’ll be keeping our Halii Kai Condos gallery up-to-date.

A hui hou,

Beth Thoma Robinson, R(B)
Direct: 808.443.4588
Email: beth@hawaiilife.com