Kohala Ranch, located on the Big Island of Hawaii, has seen a drop in land values this year after losing the nondedicated agricultural use tax benefit. When the subdivision was allowing open range grazing from a nearby cattle rancher, vacant parcels were taxed $200 per year. Since the homeowners association decided to remove the cattle from the development, lot owners are now paying the full rate of $9.35 per $1000 assessed value. An owner who had been paying $200/year for a lot assessed at $300,000 is now paying $2800/year. This increased tax burden has motivated a large number of owners to put their property up for sale. Kohala Ranch covers approximately 4000 acres divided into about 445 lots. Less than half of these lots have been built out. Of the vacant lots, there are currently 48 listed for sale and 4 pending.
Median sales prices in the past 6 months have dropped to $200,000 compared with $260,000 in 2018. In 2018 there were 11 lots sold in 12 months. In the past 6 months, 9 have sold, and 4 are pending. I believe the driving force behind this massive sell-off is the increase in taxes after expelling the cattle. Owners who were sitting on lots and not building soon no longer want to pay the $271/month HOA fee plus a ten fold tax increase.
If you are a buyer looking to purchase a lot in a beautiful area and plan to build soon, Kohala Ranch may be just the right spot. With inventory so high, it is definitely a buyers market.
Yet to be seen is any negative effect on the home market in Kohala Ranch. Prices, sales, and inventory appear to be stable so far. There are 7 active listings and 3 pending sales ranging in price from $1.495M to $2.895M. The average sale price remains about $1.4M. Since adoption of the Short Term Vacation Rental ordinance, un-hosted vacation rentals are no longer allowed in the Ranch. One would anticipate a sell-off of homes that were vacation homes partly funded by STVR. Realtors, owners, and buyers continue to watch the situation. See “The Future Of Big Island Vacation Rentals” or more information on Hawaii’s STVR law.
If you have questions about Kohala Ranch lots or homes for sale, or are an owner looking for more insight, please feel free to reach out to me or your favorite Realtor.