May 2020 Seller Update: Hawaii Real Estate and COVID-19 Impacts
As soon as the Governor issued the latest COVID-19 proclamation that will effectively keep Hawaiʻi closed to visitors for at least another month through the end of June, I reached out to my sellers — both active and upcoming listings — to let them know what to expect. Some of these thoughts are equally relevant to buyers, of course. This is only one womanʻs opinion, so feel free to share your reactions in the comments.
Hawaii Governorʻs 8th Proclamation and the Hawaii Real Estate Market
In the West Hawaii Island markets where I list and sell, most of our real estate buyers are not already local. Even ignoring that restrictions on real estate as not an “essential business” did not allow us to do live showings, the biggest damper on activity for the past two months has been the inability of buyers to travel to the islands. Last week the Governor extended the 14-day quarantine for all passengers arriving in Hawaii through June. Here is a link if you want to read the Governorʻs 8th Proclamation.
If you did want to come and quarantine, there is the issue of where to do it. Our Hawaii County Mayor has not yet lifted the prohibition on short term vacation rentals as a “non-essential business,” and our hotels are only gradually announcing plans for partial reopening in July or August.
The bottom line is that it will be at least six weeks before our Mainland buyer clients will realistically be returning to look in person at property. Various proposals are being floated for how to begin reopening to tourism, from requiring negative COVID-19 tests pre-arrival, to starting with countries like New Zealand where the infection rate is low. Talking to my own buyer clients, they will also be judging how “safe” they feel about the process of traveling, even acknowledging that once they get here Hawaii has done an excellent job of controlling cases and community spread.
The positive news is that we have actually listed and sold properties during the past six weeks:
- Local buyers continue their searches, operating within appropriate showing guidelines.
- We are closing transactions for off-island buyers who saw resort property prior to the shutdowns, and see a new listing they like. If a buyer is familiar with a condominium complex and the floor plans, they feel pretty confident to purchase.
- We also have examples of buyers who looked with their agents prior to the restrictions, but not at the particular home they are purchasing. They are relying on video and the eyes and ears of their agents, now that we are allowed to again go look at properties on behalf of our clients.
- Vacant land has been generating a lot of inquiries, across price points. Some buyers feel it is less risky to buy a lot sight unseen than a $1+ million home, because they will still be building living space to their exact specs.
More General Indications on the Luxury Real Estate Outlook
All of Hawaii Lifeʻs local, national, and international affiliations – Luxury Portfolio, Christies, Concierge, our local real estate boards – are offering regular informational sessions featuring guests like economists or brokers in different markets, so that we have a better picture of what is happening with our shared client base.
In all markets, some very high end deals are being consummated. All of us, and the third party websites like Zillow/Trulia, are seeing record levels of online traffic. And across markets, we are also hearing strong trends reflecting the recent experience of people who realize they may be working from home, spending more time with family at home, or simply wanting to avoid crowded environments. I agree this post from one of our Oahu agents on features buyers will be favoring in the medium term.
Big Island Real Estate Market Outlook in 2020 and Beyond
Looking at all the uncertainties and the overall economic as well as pandemic unknowns, here is my best guess as to what might happen in our Big Island real estate market.
1. SHORT TERM – I think once the islands open to travelers this summer, we will see a strong rebound in real estate sales. For financing buyers, interest rates are still amazing, and as sellers you will have price support from the most recent six months of strong sales. In some areas we still have a shortage of inventory meeting buyer preferences. I do not know whether this period will last 2 months or 6 months or through the regular “winter selling season.” But I would strongly recommend to all my clients that if you want to sell, this is the time to be on the market.
2. MEDIUM TERM – I think we are likely to see downward pressure on prices in some areas in the medium term. For example, with the recovery to our tourist economy likely to take a couple of years, we will see more resort properties listed as they become less financially viable, and with lower rental income on average, we will have less buyer demand.
Depending on how severe the recession turns out to be, the buyers in our “future retirement” pipeline may be extending their moves farther into the future. And they may be more conservative as to their target price point depending on the impacts on their financial portfolios. In other words, my best guess is you will have a harder time finding a buyer in one year than you will today.
3. LONG TERM – The state long term plans for resilience will make Hawaiʻi an even more desirable place to live, and may provide more job opportunities that broaden our pool of qualified buyers beyond second home, work from home, and retirement demographics.
Recommendations for Sellers Now
While many listings have been “resting,” those that are in the MLS and online are getting even more focused attention. I am recommending that my sellers be in front of the prospective buyers during this next 6-8 weeks before reopening – because I see a glut of new and returning listings coming on at that point and competing for buyers.
Halii Kai 11A
Kolea Condo Villas #1C
Some buyers are comfortable with Matterport tours as giving them the ability to “walk” virtually through a home. I have had extremely good success with video, both professionally shot and more low key, and Hawaii Lifeʻs website is seeing high levels of listing video views. In any case, now is a great time for continuing to market via blog, video, and simple MLS presence.
If you are interested in exploring how to best get your property in front of buyers during the next few months, I would be happy to brainstorm ideas.
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