Big Island

North Kohala (Hawi to Kapaau) Home Sales 2022

I like to start off each year with a review of the real estate markets in the key neighborhoods in which I am active. I have done so on this website for 13 years and counting! This report covers the portion of North Kohala with Hawi and Kapaʻau zip codes, and a separate report covers the Kohala gated communities near Kawaihae. Here are links to the Hawi to Kapaʻau market report for 2021 and, for context, the review of 2020 residential sales.

The summary?

Once again, in many respects this local market mirrored national and statewide real estate trends for 2022. Kohala real estate sales in the first half of 2022 looked very much like 2021, both in the pace of home sales and increasing prices. Activity slowed in the second half of 2021, and prices stabilized after two years of rapid growth.

Example of median priced home in Kohala

This home in the Ainakea neighborhood is listed for $715,000, just below the 2022 median home sales price.

Kohala Home Sales Slow from 2021; Prices Rise in First Half; Steady in Second Half of 2022

The number of sales of residential property in Kohala climbed from 65 homes in 2020 to a record-breaking 75 homes sold in 2021. The first half of 2022 looked to be right on pace with 2021, with 37 homes sold and the median price increasing a bit to just over $800,000:

Summary – Kohala Homes Sales 1st Half 2022
# Lowest Highest Average Median Mode
Listings 37 $399,000 $3,998,000 $1,149,350 $824,950 $725,000
MLS Sale $ 37 $355,000 $3,660,000 $1,083,966 $804,750 $580,000
DOM to sale 37 0 387 42 6 0
Sale/Current Price 37 71.9% 112.8% 96.8% 99.1% 100.0%
Sale/Original Price 37 80.0% 120.0% 97.5% 98.6% 100.0%

The second half of last year things slow down. Rising interest rates and talk of recession combined with simple lack of “inventory” (homes listed for sale) to create conditions for a slowing of the buying frenzy, with only 17 sales for a full-year total of 54 sales (again, compared with 75 sales the year before).

Summary – Kohala Homes Sales 2nd Half 2022

# Lowest Highest Average Median Mode
Listings 17 $425,300 $3,795,000 $1,006,582 $799,000 $998,000
MLS Sale $ 17 $383,800 $3,800,000 $980,018 $750,000 $1,250,000
DOM to sale 17 0 132 34 18 0
Sale/Current Price 17 90.2% 101.2% 96.9% 98.4% 100.0%
Sale/Original Price 17 80.8% 101.2% 96.0% 98.4% 100.0%

While this led many prospective buyers to assume there would be a dramatic real estate market crash, that did not happen. The median days on market to sell increased from 6 to 18 days — but for historical perspective that compares with a median of 58 days on market in 2019. Median sale price in 2019 was $511,250, compared with $750,000 for the second half of 2022.

In summary:

  • 54 homes sold in 2022 in Kohala, compared with 75 homes in 2021.
  • The lowest price a home was listed in 2022 was $399,000 for a 1,080 sq ft “handymanʻs special” that sold for $355,000. In 2021  it was $209,900 for a bank-owned “tear down” that sold in a bidding war for $241,000.
  • The highest price sale was $ 3,800,000 for a newer contemporary styled home on 22.45 acres makai of Hawi town. This is the second year the highest priced home sale was on acreage outside of a gated community.
  • The median home sale price in the Hawi to Kapaʻau area rose from $511,250 in 2019 to $577,000 in 2020 to $605,000 in 2021 to $777,375 in 2022. That median price buys a modest home in Ainakea, a subdivision envisioned for working families in Kohala.
  • There are currently only 16 homes for sale in Kohala, 5 more than at this time last year. The least expensive is $599,000 for a 924 sq ft home in Ainakea. The most expensive is $4,495,000 for two parcels totaling 141 acres, with farm equipment and a home intended as a farm manager cottage.

Rising Interest Rates Affect Local Buyers; High Percentage of Cash Sales at All Price Points

One of the questions or assumptions I hear a lot is about the effects of rising interest rates on the pace of sales and especially on prices. In 2022 for North Kohala sales, an astonishing 39% of sales under $1 million were all-cash; that figure rises to 52% for sales over $1 million. With that amount of cash floating around at all price points, and especially higher end buyer demand being relatively insensitive to interest rate moves, home prices are not trending downward in any significant way.

That doesnʻt mean there is no effect.

Imagine a buyer who qualified for a $750,000 home with a 20% down, $600,000 mortgage at 3% — a payment of $2,530/month which is about what a 2 bed/2 bath rental would be today. That same loan would cost $3,753/month as of January 2023. Or looked at differently, a borrower who can afford roughly $2500/mo could get a mortgage of only $400,000 versus $600,000. Many buyers are not willing to reduce their expectations and many simply cannot find anything for sale at the price they now can afford.

Higher end real estate buyers are listening to the advice of their mortgage lenders: “marry the home, date the rate.”  They can opt for a higher rate mortgage which they can still afford, or pay points for a buy-down product, betting that interest rates will drop in the future.

Outlook for 2023

Real estate markets are cyclical but not all cycles are alike. As I mentioned at the beginning, the past 13 years I have written annual real estate market reports for North Kohala on this website but it does not give me any better powers of prediction. Here is what I think we can safely say:

  • There is still significant demand for Hawi and Kapaʻau homes at all price points, and with limited housing stock and very little new construction, homes prices are unlikely to drop significantly.
  • Interest rate fluctuations will have only a modest affect on sales.
  • For sellers, homes will take longer to sell, but still less time than historically. Homes priced in line with recent sales will attract more showings and offers and sell faster than those with ambitious price expectations.
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