Big Island homebuyers and sellers remain cautious in the face of an uncertain housing market.
On paper, single-family home sales in the first half of this year looked good compared to last year. According to multiple listing service data, the total number of house sales this year to date is higher than last year to date — 1,003 homes were sold by the end of June, a little over 1% higher than June 2023 — while the median sales price also rose 7% to $535,000.
Those increases were not necessarily reflected in the island’s busiest districts, however. Sales in South Hilo and Puna were largely stagnant in the first half of this year compared to last year. This year so far, 118 homes have been sold in South Hilo — only three fewer than in the first half of 2023 — while Puna’s sales this year are exactly the same as in the first half of 2023, at 404.
On the other hand, the number of North Kona home sales this year to date jumped by about 20% compared to the same period in 2023.
The median South Hilo home price was about $595,000 in June, up by nearly $50,000 from June 2023, while the median Puna home price dropped by about $10,000 to $398,000. North Kona’s median price dropped from $1.2 million to $1.1 million within the same period.
“The market’s typical for the island, but it’s a smart market,” said Nate Gaddis, president of Wai Pacific Real Estate Group. “People aren’t falling in love as quickly as before.”
Because of this, Gaddis said, houses are staying on the market for longer — MLS data pegs the average time on the market at about 37 days — and sellers are setting their expectations conservatively.
“If people overprice in this market, they’ll get eaten alive,” Gaddis said.
Although North Kona’s median home price dropped compared to mid-2023, Gaddis said it has increased by about 30% since the start of this year, something he attributed to lingering affects of the Lahaina wildfire.
Former Lahaina residents seeking new homes elsewhere in the state, or homebuyers who had considered buying in Lahaina shifting their attention to Kona, drove what Gaddis called “really outsized growth” in the first quarter of the year.
That growth has since slowed, Gaddis went on, while East Hawaii’s market has remained stable with strong demand.
But looking ahead, the market could cool as buyers wait to see how the economy reacts to several unknown factors.
“In an election year, the market typically stops around August,” said Gretchen Osgood, principal broker at Hawaiian Isle Real Estate. “Nobody wants to take a chance when they don’t know how the election will end up.”
Some buyers also might be hesitant to make moves as the county ponders changes to its short-term vacation rental regulations, and Puna buyers especially must factor in skyrocketing home insurance rates in Lava Zones 1 and 2.
“It’s total chaos in Lava Zones 1 and 2,” Gaddis said. “They’re absolutely getting hammered.”
While the Federal Reserve has indicated plans to cut interest rates in the near future, Osgood didn’t predict any immediate impacts on the Big Island real estate market. On paper, cuts could give people more buying power, which could move inventory more quickly, but Osgood said she doesn’t expect the rate cuts will be particularly substantial.
“I think it’s going to be more of a slight trim than a cut,” Osgood said.
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.