The Big Island’s real estate market is feeling the effects of global uncertainty, with home sales dropping islandwide during the third quarter of the year.
According to multiple listing service data, there were 203 single-family homes sold on the Big Island in September, a significant drop from the 268 sold in September 2021 and also slightly down from the 205 sold in August.
All districts on the island had a decrease in sales in September compared with the same month in 2021, in keeping with the trend in August and July, which also were weak compared to 2021. In particular, Puna saw 77 homes sold in September, a 13% drop from the previous year, while August sales fell 17%.
South Hilo had the smallest decline in September, as the 30 homes sold represented only a 3.2% drop from the same month last year. North Kona’s 43 homes sold similarly represented only a 6.5% decrease.
Through, there have been 2,085 homes sold this year, a drop of 13.7% from the first nine months of 2021.
Median sales prices, however, have still gone up in most districts. In Puna, prices rose from $310,000 to $350,000, and in North Kona from $887,000 to $995,000. South Hilo is one of the few areas to see a meaningful decline, dropping from $545,000 to $490,000.
Big Island real estate agents agree that an economic recession is upon us and expect the market, which has enjoyed a robust few years, to have to tighten its belt for the foreseeable future.
“We’re still the Big Island, we’re still Hawaii, and that will always be popular,” said Kona Moran, Realtor and principal broker with Hilo Brokers. “But the rush of people coming here to escape the pandemic has subsided.”
Moran said that there are a lot of factors driving the current economic uncertainty — from the war in Ukraine, to tensions with China, to rising gas prices, and the federal reserve raising interest rates — but the fear and chaos caused by the confluence of all those factors has had a chilling effect on the market that he expects will continue.
“Sellers have it hard,” Moran said. “It’s not too long ago we were having bidding wars over limited inventory.”
However, Moran said inventory is still low, so sellers can still command higher prices, even though many buyers have now been priced out of all sectors on the island.
Realtor Gretchen Osgood, principal broker at Hawaiian Isle Real Estate, said homes that have sold for $1 million are now being sold for $900,000 as sellers reduce their prices to attract buyers. Even though there are still some cash buyers purchasing homes on the island after selling on the mainland, Osgood agreed that buyers have become more hesitant.
“I think they could end up going down by $400,000 before this is over,” Osgood said, adding that some sellers are still taking “a long time to get a reality check” but will eventually have to accept a lower price than what they want.
On the other hand, Osgood guessed that, as the market dries up, the bulk of home sales might be made by Hawaii residents instead of housing speculators. She reasoned that, with interest rates high, nobody savvy about playing the market will buy a high-value home on Hawaii Island at a high interest rate, but somebody with strong ties to the island moving to a new home will.
But neither Osgood nor Moran expect the recession to end anytime soon. Moran said that, hopefully by spring, it will be clear “just how far down the bottom is,” while Osgood expects the Federal Reserve to continue to raise interest rates to combat inflation, which will further stifle the market.
“My advice here is: If you think you’re going to move soon or lose your job soon, sell your house now,” Osgood said. “Don’t wait until next year.”
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.