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Kohala Coast Resorts – Market Shifts Upward with Lower End Disappearing

With the winter selling season drawing to a close, it’s become apparent that 2012 marked a turning point in the real estate market on the Big Island’s Kohala Coast. It’s not just that prices on similar properties are higher than a year ago, the lower end is disappearing!

Freestanding home at Villages at Mauna Lani offers quality and pool for $1,795,000 (MLS# 250949)

Lower End Dries up at Mauna Lani Resort

My business partner, Pam Deery, recently wrote about best buys in real estate for sale under $1 million at Mauna Lani resort. This morning, when we checked to see what active listings we could show at Mauna Lani Resort to a client whose target price point is $500,000, our eyes grew wide. With not a single active listing under $500,000, we found only her suggested best buy at Fairways at Mauna Lani for $518,000 asking price (MLS# 250166). A year ago, there were dozens of condo listings under $500,000 at Mauna Lani Resort. Those days may be over.

To compare what’s sold and currently in escrow with a similar period in 2011, I used the first five months of sales of last year to develop this view of the bottom end of the condo market at Mauna Lani Resort:

  • In January-May 2011, there were 12 Mauna Lani condos sold under $500,000 and the lowest sale was under $300,000. Year-to-date there have been only 2 sales under $500,000 with another 6 condos in short sale hell or escrow below $500,000.
  • Another 20 condos sold for less than $500,000 at Mauna Lani between June and December 2011. That’s a total of 32 sales under $500,000 last year…four times the total of the properties sold or pending currently this year.

If 30+ buyers are looking for property in the $300K-$500K price point, what’s going to happen with that demand given only ONE active listing at Mauna Lani near $500,000 as of April 16, 2012?

My guess is with the lower end disappearing at Mauna Lani Resort, those sales will shift back to Waikoloa Beach Resort, where there is still inventory under $500,000.

The lowest priced condo for sale at Kolea is a short sale with this view for $1,050,000

Kolea and Hali’i Kai – Competitors with Mauna Lani Condos Show the Same Trend

Waikoloa has the under-$500,000 inventory, although at the most competitive communities (Halii Kai and Kolea) the same trend towards higher prices is evident. This particular client had just asked me about Kolea, where there are three condos showing contingent in their price range, but the lowest priced available listing is a new short sale at $1,050,000 (MLS# 253768) for a ground-floor 3 bedroom condo in the 6-plex buildings.

To put this in perspective, in the first 5 months of 2011 there were 5 condos sold at Kolea: median price $670,000 and two of them below $500,000. For the entire year, 15 villas sold: 5 below $500,000 and all but two for prices under $1 million. A 2nd floor villa in the front row sold for $1,425,000 unfurnished and a 3rd floor REO (bank-owned after foreclosure) sold for $1,569,000. Very similar distribution to condo sale prices at Mauna Lani resort.

What a difference a year makes! With no closings so far in 2012, here is the distribution of Kolea condos with pending sales:

  • Four listings under $599,000 are all short sales or foreclosures. Two of them are transactions where I represent buyer or seller, and those are both in solid escrow; the other two are short sales with committed buyers, according to the listing agent.
  • One sale is a 3 bedroom in the 12-plex, not a distress sale, listing price $699,000.
  • One listing is a short sale on a front row 2nd floor, asking price $1,299,000, although given the trends, we have to wonder if the bank will accept that price.
  • Three pending Kolea sales are front row penthouses at listing prices of $2,195,000 to $2,400,000.

The strange thing is that if one were to look at median prices, last year’s sales and this year’s pending sales both would show a median price in the mid-$600,000s, but that does not adequately describe the reality of what buyers should expect to pay.

There is not a single active listing in the 12-plex buildings; no Kolea condos for sale at or below the previous median price. It is beginning to look like buyers should be thinking $1 million for a first floor condo, $1.5 million for a second floor, and $2.0 million for a third floor in the 6-plex buildings at Kolea. What do you think the sellers of the next 2-bedroom listings will ask, especially if they are not distressed?

Over at Halii Kai, sales in the first part of this year have been dominated by the developer closeout. The median sales price of the 15 sales to date would be $520,000 (with the lowest price paid for a Halii Kai condo this year $375,000 for a short sale in the Coconut Grove, and the highest price $1,125,000 for the same 3 bedroom floor plan on the oceanfront.) The eight Halii Kai condos that are pending sales would also have a median price around $500,000.

Of the 12 active listings (including the last two developer units), five of them are the smaller 2-bedroom floor plan. There are two 3-bedroom condos for sale at around the $500,000 level. Once these 7 units sell, the lowest price on a Halii Kai condo listed for sale will be $795,000.

No wonder the appraisers have stopped checking “declining market” for Kohala Coast condos.

More on the over $500,000 real estate outlook to come!

A hui hou,

Beth Thoma Robinson, R(B)
Direct: 808.443.4588  
Email: beth@hawaiilife.com

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Todd W. Barrett, R(S), ABR

April 21, 2012

Fantastic analysis of the Kohala Coast market invetory Beth! With all three West Hawaii major markets showing steep declines in inventory, one has to consider the implications of such glaring data.

Todd W. Barrett, R(S), ABR

April 21, 2012

Fantastic analysis of the Kohala Coast market invetory Beth! With all three West Hawaii major markets showing steep declines in inventory, one has to consider the implications of such glaring data.

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