Short sales, REO’s and luxury property auctions are driving down prices in Kona despite low inventory.
Seventy-nine homes sold in the first quarter of 2010 here in Kona as compared to only 42 in the same period last year. Yet while escrows are up, and inventory is down, the median price for homes in Kona actually dropped 12.75% to $390,000.
What exactly what can you get for the median price here in Kona? How about an ocean view 2-bedroom home (MLS# 230809) with a guest cottage right in town priced at $399,000? Sounds like a deal to me.
Enjoy whale-watching and ocean views from the interior of this Kona home (MLS# 230809), well-priced at $399,000
So what’s driving prices down with all these buyer’s in town?
- Short Sales* – Many short sales that have been dragging on are finally closing. These contracts were written often months ago when the economy wasn’t looking quite as rosy.
- REO* – REO’s continue to often be bargain-priced as banks look to get rid of their foreclosed properties.
- Luxury Property Auctions – On the upper end, the resort neighborhoods of Kukio and Hualalai held auctions to move some property. Some of these multi-million dollar homes sold at more than 50% off their list prices.
*Taken together, short sales and REOs counted for half the home sales in Kona this quarter.
With all this going on, contact me to help you find your Kona deal.
Joyce Murphy RB
April 15, 2010
Great post Eric. Other people are asking the same question. Are you saying the sales are up BECAUSE the prices are down? Some people seem to think we are seeing the beginning of rising home values. What is your take on where home prices in the near future?
Mahalo,
Joyce Murphy RB
April 15, 2010
Great post Eric. Other people are asking the same question. Are you saying the sales are up BECAUSE the prices are down? Some people seem to think we are seeing the beginning of rising home values. What is your take on where home prices in the near future?
Mahalo,
Katie Minkus, R(BIC)
April 15, 2010
Aloha Joyce – welcome and thanks for commenting on our blog!!
I, for one, am not ready to jump on the “home values are rising” bandwagon. Especially in Kona. A lot of the inventory selling in Kona right now can be directly attributed to the current tax incentives, and when those end in June, it will be interesting to watch the effect on volume of transactions. Additionally, I believe we still have another wave or two of REO and short sale properties to ride and those can take us into some pretty deep troughs before we find ourselves on the price upswing again. Neighbor island reality is we’ll need to see both job creation and small business lending increase significantly before we’ll be able to toot the “on our way up again” horn.
Katie Minkus, R(BIC)
April 15, 2010
Aloha Joyce – welcome and thanks for commenting on our blog!!
I, for one, am not ready to jump on the “home values are rising” bandwagon. Especially in Kona. A lot of the inventory selling in Kona right now can be directly attributed to the current tax incentives, and when those end in June, it will be interesting to watch the effect on volume of transactions. Additionally, I believe we still have another wave or two of REO and short sale properties to ride and those can take us into some pretty deep troughs before we find ourselves on the price upswing again. Neighbor island reality is we’ll need to see both job creation and small business lending increase significantly before we’ll be able to toot the “on our way up again” horn.
Erik Hinshaw R(S)
April 15, 2010
Thanks Joyce, As for my take on home prices I take it day by day. Katie is absolutely right that if we continue to see short sales and REOs come on the market at ever lower prices while Hualalai and Kukio hold another auction prices will fall. What I can say is that I am seeing a big change in buyers. A few months back everyone was interested in “the best deal.” Now they are more interested in getting “the best home.” Often the best home is not a short sale or REO and they are willing to pay a bit more for it. For the most part they are boomers who will be retiring in a few years and they look at this as their dream home not an investment. None of them are concerned with the tax credit as this is a second home for them which I think makes us different from most mainland markets. In the end I wouldn’t be surprised if we see a quick snap upwards, maybe 10% or so in the coming months and then the long trough that Katie talked about. For now I just keep trying to find the best house for the best price for my buyers and that is keeping me busy.
Erik Hinshaw R(S)
April 15, 2010
Thanks Joyce, As for my take on home prices I take it day by day. Katie is absolutely right that if we continue to see short sales and REOs come on the market at ever lower prices while Hualalai and Kukio hold another auction prices will fall. What I can say is that I am seeing a big change in buyers. A few months back everyone was interested in “the best deal.” Now they are more interested in getting “the best home.” Often the best home is not a short sale or REO and they are willing to pay a bit more for it. For the most part they are boomers who will be retiring in a few years and they look at this as their dream home not an investment. None of them are concerned with the tax credit as this is a second home for them which I think makes us different from most mainland markets. In the end I wouldn’t be surprised if we see a quick snap upwards, maybe 10% or so in the coming months and then the long trough that Katie talked about. For now I just keep trying to find the best house for the best price for my buyers and that is keeping me busy.