While single family home sales in North Hawaii (North Kohala and the Kohala Coast) are booming despite Covid-19 related travel restrictions, the volume of sales in the Kohala Coast resort condominium market is significantly lower in the past 8 months than it was in the same period of 2019. Prices, so far, remain steady.
The upper end of our resort market — single family and paired home sales from Hualalai and Kukio along the coast to Mauna Kea Resort, looks more like the frenzy for homes on acreage in Kohala. This is consistent with luxury real estate market trends across the continental U.S., as well as elsewhere in Hawaii.
Since Mauna Kea Resort has few condominiums for sale, I analyzed the sales statistics for Waikoloa Beach Resort and Mauna Lani Resort, where the bulk of the real estate activity is in condos. The resort condo market is highly seasonal, with a disproportionate percentage of sales typically occurring in the “high season” for visitor arrivals, roughly Thanksgiving through Easter, and a second bump tracking visitor arrivals in July-August.
Summary Statistics – Waikoloa Beach Resort Condo Sales 2019 versus 2020 YTD
At Waikoloa Beach Resort, the first eight months of 2019 saw 68 condo sales, with a median price point of $520,000.
In the first eight months of 2020, only 36 sales have been reported, a decrease of 47%. On the other hand, the median price is pretty much unchanged:
Considering that anyone who saw their purchase in person likely was here prior to restrictions in late March, I would expect to see a larger drop in sales after the beginning of May. That is exactly what happened with only 14 condo sales closing since May 2020, compared with 34 in the same period last year.
Summary Statistics – Mauna Lani Resort Condo Sales 2019 versus 2020 YTD
The pattern is similar for Mauna Lani resort condo sales, but the drop is less dramatic. In the first eight months of 2019, there were 61 sales with a median price of $815,000.
That drops to 50 sales with a median price of $865,000 for the first eight months of 2020, and the entire difference was in the May-August period affected by Covid-19 travel restrictions:
Outlook for Waikoloa Beach Resort and Mauna Lani Resort Condo Sales
Travel restrictions to Hawaiʻi have been extended through September, which means we would need a heck of a fourth quarter to make up lost ground for the year.
At Waikoloa Beach Resort there are only eleven condos in escrow; last year there were 28 sales closed September- December. The market is already behind by 32 condo sales for the first eight months, so it looks like we would need more sales from now to the end of the year than we have sold and in escrow in order to keep 2020 even with 2019.
At Mauna Lani Resort the situation for the remainder of the year looks dramatically worse than the earlier numbers. There are 13 condos in escrow, compared with 32 sales closed in September – December 2019. Adding the lower sales from January – August, it looks like we need another 30 condos to sell this year to stay even.
Judging from my own clients and new prospects, many of whom have booked and rescheduled their visits multiple times, I do see pent up demand. I also see a lack of urgency, as one reason for purchasing a resort condo is to be able to legally rent when you arenʻt using it. Since short term vacation rentals on Hawaii Island cannot be rented for the 14-day quarantine period, none of the sellers who normally rent are getting vacation rental income. Buyers figure it is savvier to wait to buy until the cash flow starts.
I also get inquiries looking for “deals”, and I suspect that Covid-19 travel restrictions aside, some buyers believe the extended period without rental income will inevitably precipitate another round of distress sales like we had a decade ago. I am not sure that is the case as the underlying dynamics are very different than they were in 2009. But that is a topic for another day.