It’s a new year and fortunately I started the first day of the business year, January 4th, with a closing of a luxury Princeville townhome at Ka`iulani. So how did the year pan out in the end as the market gathered momentum through the fall into the winter? (BTW, Kauai winters are simply delicious, with many days in the high 70s and 80s.)
On Kauai, single family home sales jumped to 36 in December, up 89.5 percent from 19 the same month a year ago. The median home price also went up on Kauai, which set it apart from trends on the Big Island and Oahu. The Kauai median home price increased in December by 8.2 percent as it went to $530,000 from $490,000 . The median price was skewed by a couple of very large closings in December. There were 15 condominiums sold, six more than a year ago, however the median price dropped 49.8 percent to $313,500 from $625,000 last year. In a market as small as Kauai, just a few individual transactions can effect the market.
Reviewing the year, we had 500 real estate transactions record for the calendar year of 2009. My notion is that we may have a larger number in 2010 as the momentum of foreclosures, short sales, and failed loan modifications will result in more superb values, and buyers that are finally willing to pull the trigger. One buyer was recently heard saying.,”I don’t want to waste a good recession.'” I’ll drink to that. Who would?
Of the 500 transactions, 296 of them, or almost 60% were under $500,000. You can see by the following pie chart just how many sales occurred in each of the different price ranges. Naturally a lot of the momentum in the market has come from the affordability of Kauai properties under 500K. The overall sales volume for 2009 was down 27% which was a much lower drop that it looked like it would be earlier in the year. That was helped of course by 8 sales of $4 million dollars or greater. This included a number of celebrity purchases and the sale of “Tara Plantation”, the large estate formerly owned by movie producer Peter Guber, which sold for $28 million.
In this market which favors buyers, it’s good to know what type of discount to anticipate when purchasing property here on Kauai. 2009’s numbers reveal an average discount of sales up to a million dollars ranges from 7.5 to 8.6 percent as the chart below indicates. There are many variables in this equation. In some projects where the bank has already established the price it will take, there will be no discount. i.e., the property is already priced to the market. In other situations, a buyer may get a larger discount when the seller is motivated or distressed, which is sometimes the same thing.
As the banks become more efficient at short sales ( selling a home for less than the amount the bank is owed) there will continue to be a good percentage of the market, like the rest of the nation, that is comprised of short sales and bank owned properties. In December, of the 36 homes and 15 condos that sold on Kauai, 14 of them were either short sales, distressed sales, or bank owned (REO) properties. That’s 27% of the market. I anticipate that with over 150 Kauai properties currently in the foreclosure process, that percentage will increase for much of 2010.
So buyers, time to get off the fence and take advantage of the market conditions. Sellers, if you want to be in the market today, you must realize that you are competing with the distressed segment of the market. If you don’t want to compete, stay on the sidelines. You’ll be doing all of us a favor.
Stay in tune with the latest real estate opportunities on Kauai by checking out some of my online resources:
- For a list of the latest foreclosure properties, view my Foreclosure Gallery on Hawaiilife.com
- For a birdseye view of some of the more current Kauai super deals, Check out my Videos on YouTube
- To learn more about the distressed property market, Visit my Short Sale Website, www.kauaiavoidforeclosure.com
- To receive my bi-weekly custom list of properties for investors, send me an e-mail and request my “investors list”.