HAWAI'I LIFEKona Real Estate Market and Distressed Property Update (August 2012)
Data continues to indicate strong year over year activity in the Kona real estate. The Pending Sales ratio dipped slightly in the past month due to a decline in the number of escrows and a slight increase in inventory. The year over year improvement for the Pending Ratio is quite significant at 69%.
Kona Market at a Glance
The most notable recent statistic is the Median Sales Price for the North Kona market for homes sold in the past 12 months moving above $370,000 to $373,000. Since October of last year the price had remained steadily in the $365,000 to $369,000 price range.
There are a few good reasons why we may expect to see this upward trend continue:
- Low Inventory – 215 homes “Active” priced below $4 Million
- Pending Ratio over 50 – there is more than one home in escrow for every two “Active” listings
- Year To Date Median Price of $385,000 – indicates upward momentum for the Median Price
As indicated in the Case Shiller Home Price Index through May 2012, the Kona real estate market price trend seems to be very much in step with what is being seen in major Mainland metro area prices.
Recoveries begin from the bottom price level and spread upward over time. All price ranges show substantial improvement from July of 2011.
Distressed Properties Inventory in Slow Decline
The Kona real estate market and Puna market are showing a decline in the distressed property trend. At the same time, Waikoloa and Waimea appear to have an increasing percentage of distressed properties.
The increase seen in Waikoloa and Waimea could simply mean that there are few sellers, outside of lenders, who need to dispose of non-performing mortgages or otherwise distressed properties. However, this is conjecture and the true force behind these trends is likely to show itself in the very near future.
The island-wide count for REO (foreclosure) properties for the major lenders tracked is the same as the last update at only 89 properties. This is dramatically down from the high count of 261 properties in June of 2011.
While the overall Kona real estate market inventory remains extremely low in the under $400,000 price range, there are some great deals to be found in the $500,000 to $700,000 price range.
A hui hou!
Todd W. Barrett, Realtor(S), ABR
Direct: 808.937.1629
Email: Todd@HawaiiLife.com
*Data republished with the courtesy and approval of the Griggs Report.
I enjoyed the update for Kona! Thanks Todd! Seems pretty active yet for the slow season too!
Thanks Heidi, I love statistics to see where the market is heading. Are you seeing a good flow of interested Buyers and Sellers at this time?
Yes Todd, keeping in mind this is our SLOW season I have noticed a recent surge in interest in oceanfront properties under 2mil. Laws of Supply and demand really sum up our shortage of homes equals greater demand and we can watch it effect pricing in the next few months as it has in the past months. The deals go fast and I prepare my buyers to be ready when the deal property shows up that they are looking for. The phone call at 4 or 5 am is expected on their end. And I put pen to paper. Or we loose out. Thats a glimps of our day! Ahh but then we live here and that is a blessing. Right? Good fishing Todd!
Great to hear Heidi! The inventory is so incredibly low at this point, and with price slowly beginning to rise, Buyers must be prepared to act quickly. Good luck, and congratulations on all your success Heidi. Catch a wave for me, will ya? :-)
Some complexes have turned have turned quickly such as Kolea. Some complexes still have a few distressed properties to deal with such as the Vista and other complexes see some owners locked into longer term management contracts at times paying the management approximately 75%. Owners need to take command of their units and net themselves minimum 65-70% with good on-island management. In Waikoloa Beach Resort, the Vista and Shores have lagged but are great properties. In fact my in-laws prefer staying at our Shores unit with the 650 sq foot lanai over our Kolea unit, while others in the family like the Vista. I think buyers have a nice chance still to get into the Vista or the Shores at solid cost basis but need to understand the dynamics at each.
Aloha Sean, and thank you for your insightful view of the Waikoloa Beach Resort condominium market. Are you finding that Buyers are unaware of the various types of on-island management options, and therefore are are shying away from complexes such as the Vistas or Shores?
@ Todd, I’m not implying buyers are unaware of the various on-island management options. The question is how the different companies contracts and service maybe affecting the complexes/owners CAP rate. I think it is very clear but I’ll leave that post to some one else. That said, I no problem owning at Kolea, the Shores or the Vista.
Thanks for the clarification Sean; greatly appreciated. CAP rate certainly means a great deal to vacation rental owners, and should be looked at as an optional strategy for owner occupants who may someday wish to rent there units. As a part of any Buyer’s education into future purchases of Hawaii real estate I always attempt to vet out their intentions, then provide the appropriate solutions and answers to each specific situation. At the same time, I give them options that they may not have considered giving them a better ability to weigh, change, or continue their path towards their ultimate goal of Hawaii real estate ownership.