July 2020 Seller Update: Hawaii Real Estate and Covid-19 Impacts
In late May 2020, when the Hawaii Governor extended quarantine restrictions for incoming travelers through the end of June, I sent an email to the sellers of my listings, also published here on the Hawaii Life website. Almost six weeks later, we find ourselves preparing for loosening of the restrictions on travel to Hawaiʻi as of August 1st. Here is what I am telling Sellers now — most of which is also useful if you are a prospective buyer hoping to look at properties here in the coming months.
The bottom line is this, at least for the Big Island. We are seeing a pick up in showings and offers for diverse types of real estate. Most of these buyers are relying on virtual showings and their agent. As more visitors not subject to 14-day quarantine begin arriving in late summer and fall, we could see even stronger activity. However, there is the risk that the re-opening could be shut down at any time if Covid-19 cases in Hawaii spike.
Fewer Restrictions on Real Estate Professionals Since June
- Starting June 1, we were again allowed to have in-person showings. There are limitations on how many people can be present, everyone has to wear masks and maintain physical distancing, and we ask a series of questions of buyers and their agents to be sure we are minimizing the risk of spreading the virus. As listing agents we also are responsible for providing sanitizer and disinfecting surfaces before and after showing.
- Open houses are now allowed subject to similar restrictions. However few are being held in resort and second home markets due to continued restrictions on visitor arrivals.
- Broker caravans resumed at the end of June in North Hawaii with changes to comply with restrictions on the number of people who can gather and physical distancing guidelines. For new listings with a lot of interest we also can schedule a by-invitation broker preview.
The Path of Opening the Islands to Visitors and Buyers
- In general, the biggest damper on a return to more normal real estate activity in resort and second-home markets is the 14-day quarantine imposed on visitors traveling cross-Pacific. That, together with reduced flight schedules by the major airlines, has brought visitor arrivals nearly to a halt. The quarantine rule is in effect through July 31st.
- The Governor has announced that visitors may be exempt from the quarantine starting August 1st, with proof of a negative test result for Covid-19 taken within 72 hours of departure. So far, I have heard from several Mainland clients that they are hopeful of visiting late August or September, once they see how the program is working. Others have told me they are not willing to travel until infections rates drop on the Mainland as they were about exposure risks of travel.
- Inter-island travel restrictions were lifted as of June 16th. Although most travelers seem to be visiting family, we have seen an increase in prospective buyers, particularly from Oahu.
- Short term vacation rentals are now allowed to resume operations, although only for travelers not subject to quarantine. Most owners and rental management companies have not reopened bookings, concerned about difficulties in monitoring whether their renters qualify, and the potential liability if their renters were to be the source of an outbreak. Many of our hotels have not announced dates to reopen yet, as they work towards new work flows and physical reconfiguration to keep both employees and guests safe.
Trends in Kohala Coast Real Estate Activity
- The very high end of the luxury market is strong. A $13 million home in Kukio closed in June, and there are six in escrow between Kukio and Hualalai resorts, including a $45 million front row estate.
- At the other resorts where hotels and vacation rentals are closed, we are still seeing a limited number of site unseen purchases, mainly at the lower price points ($500,000 for Waikoloa Beach Resort, $700-8000 for Mauna Lani Resort).
- Vacation rental properties in particular seem to be almost “on hold” for sales activity, other than for buyers with 1031 exchanges. Very few investment buyers are ready to pull the trigger, especially on a financed purchase, with no guarantees of how long it could be until pre-Covid cash flow levels return. They are in the wings…just not buying now.
- On the entire west side of Hawaii Island, homes on acreage continue to sell strongly, with activity actually exceeding our normal high season levels through what is normally our low/shoulder season. There are currently six homes fitting this description in escrow in the Hawi area, and six in the lower North Kohala gated communities, at prices up to $2.4 million.
- Vacant land listings are getting a lot of inquiries but few sales. Most of the showings are local buyers. Many of the inquiries are from people with a 5-10 year buying horizon and time on their hands to dream.
- Local buyers are also active thanks to low interest rates. Lenders are very busy, which has in some cases delayed closings. But appraisers are less busy, and most banks are still ordering exterior appraisals only; home inspectors also seem to have good availability right now so we are not seeing any delays due to other real estate professionals.
Real estate websites, both Hawaii Lifeʻs and third parties, continue to have historically strong listing views. My blog posts are generating sometimes two or three inquiries a day, and my monthly newsletter recap of blogs has a higher open rate than ever. Please let me know if you have questions about listing your property or about specific active listings or market areas.