After nearly 4 years of falling home prices and a market that has been steadily sliding toward “the bottom”, I must admit seeing a headline that read “Big Island Home Sales, Prices Fall Sharply” on my iPhone while showing property to multi-million dollar home buyers was a bit shocking. “Honestly,” I asked myself, “Could it really be ANY worse than it was this time last year??”
The shocking headline is from an article on Pacific Business News whose opening sentence reads,
“Home prices on the Big Island fell by more than 35 percent in April on lower sales for both single-family homes and condominiums.”
This is an interesting “statistic” especially given that for about three months now all my mainland buyers and friends have been telling me that a Forbes article (I didn’t read it) declared the real estate market was going to decline another 35% in the first part of this year, and I kept telling them “not in every Hawaii market”… coincidence? I’m not sure, but I do know that this is a very clear example of why it’s important to hire a Hawaii Realtor or Broker that knows the local market.
That’s because the median sales price reported by Pacific Business News does not tell the entire story. Median prices are irrelevant in a niche Big Island market that encompasses a 200 mile long by 100 mile wide area which is so heavily weighted toward lower-price points and currently has 1832 homes actively listed for sale in the MLS. Here is the important sold data that we should be looking at,
- 337 homes have sold and recorded this year on the Big Island.
- The least expensive home sold for $25,000 in HOVE, the most expensive home sold for $5.8 Million at Hualalai Four Seasons resort.
- There were 12 sales of homes over $1Million, and 22 homes that sold under $100k.
- 44 homes sold between $500k and $1M.
- Of the 337 homes that have sold on the Big Island this year, 56 of them were $500,000+ while 281 of those sales were under $500k.
It seems to me that median prices offer no measurable relevance when you have a market where twice as many homes sell for 1/10th the price of the most expensive homes.
So did home prices fall on the Big Island, in every single neighborhood by 35%? NO! The median home price fell in comparison to the median home price this time last year, which should be no surprise to anyone given the state of the world economy. But that does not mean that every single home is now “worth” 35% less than last year.
As I tell all my buyer clients – the bottom of this market is near, or perhaps already passed in some neighborhoods. Interest rates are low. If you find a house you love and fits your Hawaii Life, buy it now because these just may be the lowest prices that we will see for the next decade or two, and the house you love just might not stay on the market as long as you think.