Following a sharp decline in 2006, Maui rebounded with a 23 percent increase in average cost at $1.6 million. But Kauai prices, once called a bargain in the resort residential industry, has more than doubled since its $496,211 in 2003 to $1.2 million in 2007.
BY BOBBY COMMAND
WEST HAWAII TODAY
bcommand@westhawaiitoday.com
The economic slowdown, credit crunch and real estate bubbles popping across the country could signal the apex of prices in the resort real estate market, according to a Hawaii analyst.
However, Ricky Cassiday, of Data@Work, said he thinks the tipping point is near, even though the aggregate data does not show any sort of downturn.
“Unlike earlier market cycles, prices have not fallen back in the face of slower sales,” Cassiday said. “If high-end buyers continue to spend or the low-end buyers return, then prices will hold.”
But Cassiday said prices will retreat if the opposite takes place.
Cassiday also predicted that prices would continue to rise despite the market turning over into decline.
“With home values falling, plus job losses and income cuts occurring in our major markets,” Cassiday said, “there is no way that prices will continue to appreciate.”
That could change if there is an influx of Chinese investment, he added.
“That said, the level of closings has climbed down quite a bit, so there’s fewer rungs on the ladder before the market hits the ground,” he said, “Which begs the question, ‘how much is further?'”
Last year, Maui was the only county with any type of growth in annual sales, however it was a modest 3 percent. The Big Island fell by 14 percent and Kauai by 9 percent, but it was nothing compared to the 74 percent drop on Oahu, where there were only 81 closings compared to 312 in 2006.
Despite the decline on the Big Island, there were more closings in Hawaii County at 578 than in any other county in Hawaii. That was still down from 674 in 2006 and the top of the market in 2005 when there were 719 closings. But it was still better than 2003 when there were 562 closings of resort residential properties.
Cassiday also said Maui’s market will likely not last because a different political climate there has created difficulties in securing entitlements for new construction.
That may not be the same story for the Big Island where properties at Kohanaiki are set to go on line soon. “Given that,” Cassiday said, “plus a lot of land in back of Mauna Lani, Mauna Kea and Waikoloa, we think Big Island could continue to outgrow Maui in the future.”
The Big Island will continue to lag in the delivery of condominium units — always the largest segment of the market and typically double of the rest of the market combined — with an average release of little more than 300 during the next three years.
By the last forecasted years, that will represent the fewest number of condo releases in the state, with Maui leading the way at 681 units.
The value of resort properties also continued to rise in the state. Despite a small decline in value on the Big Island in 2006, average prices shot up by 13 percent last year, putting the median price at $1.93 million.
Hawaii County is still the second most expensive market for resort residential but is a relative bargain compared to Oahu, where the average price of a resort unit nears $3 million.
Following a sharp decline in 2006, Maui rebounded with a 23 percent increase in average cost at $1.6 million. But Kauai prices, once called a bargain in the resort residential industry, has more than doubled since its $496,211 in 2003 to $1.2 million in 2007.