Since I list and sell a lot of vacant lots in North Kohala, both sellers and buyers often ask me about the future direction of land prices. I also have been geeking out over the Hawaii County General Plan Update and trying to figure out just how friendly the Plan might be to more subdivision of large land parcels in our rural community, given the focus on encouraging real agricultural activity.
Both inquiries have led me to put pen to paper on the number of existing vacant lots — not the number of active listings, but the actual number of parcels already legally created, often sold several times since first developed, but on which a home has yet to be built. I looked along the coast and in the gated communities, both large and small, from Kawaihae to Hawi and beyond.
Half of Existing Lower North Kohala Subdivision Lots Remain Vacant
To be clear, all or nearly all of the lots in the older gated communities near Kawaihae (Kohala by the Sea, Kohala Waterfront, and Kohala Ranch) have been sold by their developers to private individuals. As of this writing, homes have been built or are under construction in these subdivisions on fewer than half of the lots, with Kohala By the Sea being the most built out.
|SUBDIVISION NAME||# HOMES||# LOTS||TOTAL||% UNBUILT||BUILT|
|KOHALA BY THE SEA||46||27||73||37%||63%|
*Kohala Ranch homes include 23 under construction.
Looked at another way, with an average of 20-25 sales per year, and assuming no lot sold twice in the period, that means there is a 15-20 year supply of vacant lots in the gated subdivisions near Kawaihae on the Kohala Coast!
The lot prices in these subdivisions start under $200,000, and peak at just over $1,000,000 for oceanfront in Kohala Waterfront. The Kohala Kai subdivision of larger oceanfront lots has yet to have its first sale. Kohala Kai lot prices range from $2,750,000 for 5 acres (MLS 603567) to $11.5 million for the 28-acre Lot 7 featuring 1,660ʻ of shoreline with a pebble beach (MLS 286630).
Vacant Land Near Hawi
Letʻs start with the three west-facing, sunset viewing, horse-friendly subdivisions of Ranch at Puakea, Puakea Bay Ranch and Puakea Ranch. The largest of these, Puakea Bay Ranch, is about half built out (with some homes on multiple lots) and five active listings around $400,000 (for example MLS 624215). Ranch at Puakea has three homes built, one under construction visible from the highway, and five of its remaining nine lots on the market. The non-oceanfront 20+ acre lots are listed from $719,000 (MLS 605715); two of the three oceanfront lots are also listed at closer to $4 million (MLS 633855).
In each of the smaller subdivisions, such as Kaiholena, Puuepa Ranch, and Hawi Nani, only one or two homes are built. That means another two dozen or more lots in a market where only a couple sell a year.
Supply of Vacant Land Exceeds Demand – Substantially
The bottom line is clear. With fewer than half the lots built upon in previously approved subdivisions, I can make two predictions with a high degree of confidence:
- Prices on North Kohala vacant lots will be stable for the foreseeable future. Sellers should not hesitate to accept offers within range of recent sales; buyers should not be planning for huge gains on raw land purchases.
- Regardless of the Countyʻs attitude towards new development and subdivisions, there is such a large overhang of supply even in terms of active listings, that no large scale developer is likely to see new vacant lots as giving an attractive return on investment.
That having been said, there is still an opportunity to buy a larger lot, divide in two, sell off one and build on the other. Or just join the movement and keep that large lot being grazed.
My opinions come free of charge if you want to discuss buying or selling land in North Kohala or a lot in the Kohala Coast resorts.