emiller@westhawaiitoday.com BY ERIN MILLER | WEST HAWAII TODAY ADVERTISING Cash is still ruling the West Hawaii real estate market. Half of 2011 real estate sales in Kohala were for cash, and 52 percent of Kona sales were with cash, real
BY ERIN MILLER | WEST HAWAII TODAY
Cash is still ruling the West Hawaii real estate market.
Half of 2011 real estate sales in Kohala were for cash, and 52 percent of Kona sales were with cash, real estate agent Gretchen Lambeth said in her monthly market recap.
Lambeth, who has been keeping track of real estate statistics for nine years, said she’s never seen so many of the sales being completed without financing.
The rates will likely remain high, she said, “as long as interest rates for savings and CDs stay exceptionally low.”
People who have saved enough cash to buy outright a house or condo here tend to be conservative with their money and see investing it at an interest rate so much lower than inflation as a bad investment, she said. Property here will earn them at least some return on their money, she said.
North and South Kona posted 6 percent more sales of homes, condos and land in 2011 than 2010, with 824 sales last year, compared with 774 sales closings in 2010, she said. House sales led the market, with an 8 percent increase from 2010 to 2011. Condo sales closed the year up 6 percent, she said.
Land sales were actually lower in 2011 than 2010, at 82 sales compared with 86.
“Sellers have been holding on to their prices on land,” Lambeth said. “It’s not a spur of the moment buy.”
In some of the developments, such as Lokahi Makai, lot prices were up about $15,000 to $20,000 last year. Builders are the likeliest market for such lots, and if they have to buy the lot, then build and sell a home, that amount can make the difference between no profit and earning money on the sale, Lambeth said, which may account for some of the slowed sales.
North and South Kohala posted an even larger gain: 85 more sales, a 17 percent gain, from 2010 to 2011. But the region’s sales seemed to peak early in the year and lose momentum each quarter thereafter, Lambeth said.
The reason for the slowdown wasn’t clear, Lambeth said, adding she was a bit concerned to see 98 sales in the region during 2011’s fourth quarter, the first time in 18 months sales had been lower than 100 per quarter.
West Hawaii appraiser Larry Baird said he’s starting to see prices in a few neighborhoods stabilize, particularly those neighborhoods that appeal to mainland retirees.
“They feel it’s a good bargain,” Baird said.
There has been some movement away from the second-home market, he added.
At the lower end of the market, West Hawaii last week had only 14 fee simple houses available for less than $300,000, Lambeth said. For comparison, just one house at the price was available in June 2008, when the market started declining. By the end of 2009, 25 houses were available in that range, she said.
“Under $300,000 was an artificially low price point,” Lambeth said. “It was a huge buyers’ market.”
Still, she said the market may see another small infusion of older, possibly damaged homes at that price point in April or May, as the first of a number of “jammed up” foreclosures exit the court system. Hawaii last year enacted a law requiring mediation before a bank could foreclose on a property. That directed most foreclosures away from the nonjudicial foreclosure model and into court.
“Foreclosures will begin to dribble out,” she said. “We don’t expect to see a deluge.”
But the entity that may benefit the most from the law is the banks, which will be able to begin selling those foreclosed properties in a market Lambeth said is going up.
“It damaged our economy in Hawaii because it delayed the flushing out of all our foreclosures,” she added.
Baird called those foreclosures a shadow inventory and agreed they hurt West Hawaii’s economy.
“This coming onto the market isn’t going to be good for stability,” he said. “We want to absorb it fairly quickly because then we can bottom.”
Some of the commercial markets, including warehouses and office space, remain “very soft,” Baird said.
“The commercial side of things is still feeling the pinch,” he added.
One final bright spot, Lambeth said, is condo sales, especially units in desirable locations, say along Alii Drive, for less than $200,000. Lambeth is seeking more sellers at that price point, because there are no condos meeting that criteria available at the moment, she said.
emiller@westhawaiitoday.com
