The West Hawaii real estate market continues to strengthen, with home prices rising and affordable residences on the scant side.
The West Hawaii real estate market continues to strengthen, with home prices rising and affordable residences on the scant side.
The median price for a home in North Kona rose 21 percent to $525,000 in November, up from $435,000 a year ago. The increase is good news to sellers. But it is not sustainable in the long run, said real estate agent Michael Griggs, who tracks the market and writes twice-monthly reports on sales trends.
In this case, the jump in price is being driven by fewer homes available at lower prices, and more sales in the higher ranges. The lack of options at lower prices has also helped curb the number of homes that have been bought by 15 percent, to 411 sales.
“In just the past few months, we’ve lost a significant amount of inventory at the low end of the market, in the under $500,000 range,” said Griggs, a broker with Clark Realty Corp. in Kailua-Kona. “This will eventually shake out because 21 percent is unsustainable. You just don’t see property appreciate at this rate.”
There were 106 fewer home sales for less than $400,000 in the past 12 months than in the same period before that, according to statistics compiled by Griggs. Those fewer sales were partially replaced by 39 more sales of homes priced above $400,000.
Condo prices are up 10 percent to a median $248,000 from $225,000 last year, and sales have remained steady.
The open land market also saw a large increase in the price of property sold, from $175,000 to $259,000 — but that 43 percent increase in median price from 12 months ago is being driven partly by multiple land sales over $1 million at Kukio and Kohanaiki. The number of sales in the past 12 months has remained steady at 150.
Some loosening of restrictions on lending and favorable interest rates are continuing to work to the buyer’s advantage, Griggs said.
Demand appears to be softening in South Kona, however, where 16 homes went into escrow for a median price of $317,000 in September, down from 26 escrows at $349,800 for that month in 2013.
It is now hard to find a home under $350,000 in the stretch of North Kohala from Puakea east through Hawi to Makapala and Niulii. There are only two active listings in that price range. The supply was depleted last year when 29 out of 48 sales priced under $202,000, said Beth Robinson, a Hawi-based Realtor with Hawaii Life Real Estate Brokers, who also has a Ph.D. in economics.
The midrange market has also been brisk in upper North Kohala. There have been 12 sales of homes priced from $350,000 to $500,000, double the number last year.
Robinson said a massive inventory of open land has shrunk over the last 18 months. The luxury market has been firm as well, with a $3 million North Kohala home going into escrow on Thursday.
Buyers in Waikoloa are showing a preference for new construction, and resort property sales are firm, she said. Home prices in Waikoloa Village are on the rise as well, Robinson said.
In Waikoloa, just under 45 percent of listings were distressed properties in 2012, according to the Grigg Report. By the end of November 2014, that number had shrunk to 5 percent. In North Kona, that ratio shrank from 27 percent to 10 percent over that same period.
“Waikoloa Village has been a hot spot,” said Christine Babian, a broker with Century 21 All Islands in Waikoloa. “A lot of people have been purchasing second homes.”
Even though prices are on the rise, the Big Island is still the most affordable one, and property taxes are still reasonable, Babian said.
The market is no longer being driven just by earlier misfortunes of the general economy, when buyers saw the opportunity to snap up foreclosures and short sales.
Distressed properties aren’t much of a factor in North Kohala any longer, Robinson said. In 2012, two out of every five homes sold were distressed. That dropped to one in five in 2013 and one in ten this year, Robinson said.
The last distressed home in the area, a bank-owned home listed at $209,900 was in escrow in early December.
“Now, nondistressed properties are driving the market,” Robinson said.
Robinson said it’s not clear what’s driving the level of buying she is seeing. Professionals who study the market speculate on answers, including possible interest rate increases in the future. But the buyers she talks to appear to have individual reasons, she said.
“I don’t see any one factor,” she said, “except that the market is cyclical.”