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Kohala Coast Resort Condo Communities Sales Activity – The Flipping Begins

My team and I have spreadsheets (both written and mental!) for the Kohala Coast Resort condo communities, so we can track listings and sales activity. That way, we know at a glance whether a new listing is a deal or overpriced. We can see whether the price on resort properties for sale is trending upward or downward, and what the differential is between distress sales (short sales and REO “foreclosures”) and market sales.

There have been a few surprises lately, or perhaps I should not have been surprised, as a number of us have been blogging about the diminishing inventory, which Economics 101 tells us, given a steady level of demand, should lead to higher prices. Hence the other “f” word (no, not foreclosures)—”Flipping”—has re-entered our real estate vocabulary.

Here is a section of my spreadsheet for the Kolea condos showing the 2 bedroom units. I have it arranged as the condos stack up in the building, which also allows me to see at a glance whether there is a premium for the higher floors. The code “ss” stands for short sale…so you can see that, since 2009, these have all been short sales, and that if anything, prices on this year’s closings were down a bit. Then, that surprise! Kolea 11D closed as a short sale on May 16th; on May 19th, it was back on the market, with a price jump over $100,000. On June 12th, it was back in escrow.

1,270 sq. ft.
SOLD:

9F  $460,000 ss 9/16/09

11F  $459,900 ss 7/1/10

16E $399,000 ss-offer
11D $539,000 in escrow

SOLD:

15D $450,000 ss 8/6/10

9D $421,000 ss 2/22/11

11D $425,000 ss 5/16/11


Wow! That $539,000 condo doesn’t look like such a great deal…except that there are only two other Kolea condos for sale of this floor plan at the moment, priced at $798,000 (MLS# 233827) and $830,000 (MLS# 241720). Granted, the two are turnkey furnished with one having a super rental track record and the other never having been rented (which makes them appeal to different buyers), but a $100,000 jump is easier to swallow than at $400,000 jump.

Kolea 16J is the lowest priced turnkey 2-bedroom for sale at $798,000

By the way, a short sale approval letter does restrict buyers from selling immediately, but that is often defined as 30 days from closing. I personally would probably be conservative and not list during the first 30 days, but this is a pretty easy restriction to live with, even for an investor who plans to sell as soon as feasible.

Not every owner who decides to sell a Kohala Coast property they bought as a short sale or foreclosure is flipping. The other scenario goes like this: Buying a second home in Hawaii is a big deal at a time when the news and views about real estate markets can be contradictory. Often, buyers will begin with a purchase that feels comfortable to them. Once they spend time here, realize how much they love the lifestyle, and have a better sense of the local market and relative values, they are ready to trade up.

That is the case with another of my favorite listings, Wai’ula’ula at Mauna Kea #N201 (MLS# 245853). Purchased by the current owners in 2009 for $950,000, they have it on the market furnished for $875,000. Reason for selling? They got a great deal on a single family home, a foreclosure also in the Uplands at Mauna Kea.

No buildings obstruct the ocean view from Wai’ula’la N201

Sellers who bought at the peak are facing a larger hit selling at today’s prices than sellers who bought in 2009 or later, so perhaps it is not so surprising that they would be the first to sell as prices creep up.

Other units where the seller purchased only recently include two condos at Mauna Lani Resort. Kulalani 406 (MLS# 244145), offered for $599,000, is the only active listing in this Mauna Lani condo community! There is a condo with the same floor plan working through the short sale process at a listing price of $405,000, but as in the Kolea example above, a Kulalani buyer has only one choice.

Ka Milo 125 (MLS# 246268), asking price $1.1 million, is the only active resale with the other Ka Milo at Mauna Lani listings all being developer pre-construction units. It closed as a short sale June 7th…for $700,000. Those must be awfully nice furnishings!

Ka Milo home closed as a short sale for $700,000; now offered furnished for $1,100,000

Whatever the background story may be, whether the seller is making money, or losing money on their real estate, the right way to look at the listing is strictly with respect to alternative condos or homes for sale, and the prices on recent sales.

What the seller paid…or what the overworked Hawaii county assessor has it valued at for tax purposes…is irrelevant. It’s today’s willing buyer and willing seller who decide what the right value for that Kohala Coast resort property actually is.

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Lars Skari

July 2, 2011

Really interesting post, Beth. Thanks for sharing your insights.

Lars Skari

July 2, 2011

Really interesting post, Beth. Thanks for sharing your insights.

Beth Thoma Robinson R(B)

July 2, 2011

@ Lars, thanks for reading!

Beth Thoma Robinson R(B)

July 2, 2011

@ Lars, thanks for reading!

Martha Tumbleson, R(S)

July 3, 2011

great article, Beth. Kohala coast is such a special place – no wonder it’s one of the leaders in market trends. Will be interesting to see if this trend follows to other areas of the Big Island market.

Martha Tumbleson, R(S)

July 3, 2011

great article, Beth. Kohala coast is such a special place – no wonder it’s one of the leaders in market trends. Will be interesting to see if this trend follows to other areas of the Big Island market.

Beth Thoma Robinson R(B)

July 3, 2011

@ Martha. I would definitely love to hear reports from other districts.

Beth Thoma Robinson R(B)

July 3, 2011

@ Martha. I would definitely love to hear reports from other districts.

Annie Mendoza, (RS)

July 5, 2011

Beth…Mahalo! It really does appear from sales and offers we’re submitting that the willing buyer and the willing sellers are determining market value; not just what is being forecast by national statistics or tax assessors, etc. Wow…that Wai’ula’ula N201 is a great deal with the most recent price drop!

Annie Mendoza, (RS)

July 5, 2011

Beth…Mahalo! It really does appear from sales and offers we’re submitting that the willing buyer and the willing sellers are determining market value; not just what is being forecast by national statistics or tax assessors, etc. Wow…that Wai’ula’ula N201 is a great deal with the most recent price drop!

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