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Kauai Real Estate Sales Stats – October 2008

Hi everyone, here are the Kauai sales stats, October 2008.

The first page (Number of Sales) has some dramatically low figures for Kauai real estate as we’ve come to know it. Let’s take the north shore for example, only THREE houses sold on Kauai’s north shore in October.  And, of the 186 condominiums for sale on the north shore, only ONE sold in October.  Kauai’s east side hasn’t faired much better… with only 7 home sales in October and zero condo sales (despite 122 Active Condo listings on the east side).

With so little volume, and especially for such a sustained period (most of 2008), the laws of supply and demand lead us to assume that prices must drop… but this is where the statistics start to fail us.  There are a lot of sellers in our market who simply can’t afford to sell their homes, but who are, nonetheless, trying their hand in the market.  The result is what looks like arbitrary pricing, a glut of inventory, and few sales.

Those who can afford to price their properties accurately, and who have enough information to reach accurate conclusions about the current market, are accounting for the little sales volume we have.

I can confidently say that we, at Hawaii Life, have our finger on the pulse of the market.   We continue to receive an enormous amount of inquiries from prospective buyers, whether from our website or from other media.  The great majority of these buyers are looking for a DEAL.  Short sales, REOs (Real Estate Owned, as in, by banks), and properties that are obviously priced ahead of the market dominate the attention of the buyers in the market.

And, perhaps ironically, it seems that we have a backlog of buyers (I know that sentence is going to generate a barrage of comments, but hear me out…).  The challenge we face is to sort through the glut of inventory to find the few properties where the sellers have finally reached the conclusion to price their property accurately, IF they can afford to do so, AND they have access to enough accurate information about the reality of the market.  For these reasons, our jobs as Realtors have become much more involved, on both sides of the transaction.

And, unfortnately, the State of Hawaii isn’t helping much.  I’ll spare you the full diatribe here, and save it for another post… but the passage of Act 137 is going to wreak havoc for sellers of ‘Distressed Properties’ by making ‘Short Sales’ far more difficult (if even possible).

I’d love to say that the election will boost consumer confidence, and that credit will loosen up enough to add a wider variety of buyers to the pool (and perhaps help some of the existing distressed sellers get more affordable financing)… but I know better than to predict the future.

For now, we’re left sorting through the inventory for the ‘right-priced’ properties, and encouraging sellers to continue to lower their listing prices to stay ahead of the curve.

Happy Hunting,

Matt Beall, Principal Broker

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Ron Margolis

November 5, 2008

Very astutely put Matt. I’ve heard it said that only 15% of the homes listed are actually for sale and that goes for any market, not just a soft one. In the island market, that number may actually be lower. Seller’s need to understand the type of buyer and the mindset of the buyer with the incessant media about the housing market and economy and such. And buyers, well they can afford to be aggressive if they are patient. When something is priced correctly, it will sell, and sometimes in a very short amount of time.

David

November 5, 2008

Excellent post. I am one of those back-logged buyers frustrated by a glut of overpriced properties.

Ron, I wish it was 15%. For Kauai, I think it’s more like 3%.

Susanna

November 6, 2008

This post, and the comments bring home to me how important it is to have a dedicated Buyers Agent. I don’t know if it’s 3% or 15%, but I do know that as I’ve been working with buyers in the past 2 months, we’ve had our boots on hiking through the woods of listings that are over-priced, short-sale, or listed by out-of-touch sellers. One can’t simply tell by looking online to determine where the possible opportunities lie. With my buyers, we look into what information we possibly can, and then if the property makes their final cut, we pull a preliminary title report to see what debts are associated with it. One of my buyers is in escrow now on a great property where we worked diligently with the seller on solutions that would creatively address the debt siutation and allow them to accept an offer for less than their debt without going through a short sale.
If you’re looking and frustrated, I’d suggest finding a good buyers agent, then “hire” them by signing a Buyers Representation Agreement and start working together to find that opportunity that’s right for you. It requires patience, and a lot of work – but there are some gems!

David

November 8, 2008

Matt,

I just read the Oct stats you posted. More “impressive” than only three houses sold for the entire North Shore is that only 1 (one) condo was sold (compared to 16 in Aug 2007). That’s some serious cliff-diving.

According to the Hawaiilife search engine, there are 182 active North Shore condo listings, and 3 contingent ones (60:1 ratio!). Not quite as slow for houses (although close), with 198 active and 7 contingent (28:1 ratio).

BC

November 25, 2008

People looking at Kauai probably ignore the high pricing (out of their range?). Most of these listings really don’t ‘need’ to be sold (the rich are just fishing – rhetorically and in reality?). Wealthy sellers can ‘wait out’ the downturn. If it lasts a year or two or three it really doesn’t matter to these ‘sellers’. So, yes, we really have fewer ‘average’ properties for sale on Kauai because of these higher number of wealthy owners. We will call this the ‘wealth dilation’ effect. The wealthy also have a time domain that is different from us because they are not as rushed to complete any transaction … corresponding to the ‘wealth dilation’ effect. Therefore the wealthy ‘seller’ only sees the ‘slower’ economy as a short transitory stage. Too much physics…

David

November 28, 2008

BC – what you say may be the case, but Matt’s point is that many sellers “cannot afford” to sell. I assume he means that said would-be sellers owe more than they can sell for. In my book, such people are not “wealthy”.

Either way, asking prices remain far above would-be selling prices, so the slow market continues. Not unique to Kauai (same thing happening in high-end areas on mainland).

We keep watching and waiting.

K Andersen

December 9, 2008

I am starting to see some properties that appear to be interested in selling. So the market seems to be getting softer as far as buyers in Kauai. I also think that we will start to see pre 2000 pricing come back due to the credit markets getting tight and that it will require people to have 20% to even try to get a home in the future housing markets. Banks are very unlikely to even give you the time unless you put up some blood sweat and tears money to back your commitment to the purchase.
In the meantime lets all hope the economy does not go down the tubes. Until then I will be keeping a close eye looking for the “deal”

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