This marks the 10th year that I have written an annual recap of real estate sales in North Kohala from Hawi to Kapaau. (This update excludes the lower North Kohala subdivisions which I write about separately.)
As I look back at my blog post from early 2011, we were seeing the beginnings of recovery from the crash of 2008. From then, prices moved up quite slowly over the next 6 or 7 years while the market cleared short sales and foreclosures. Beginning in 2017, the market saw a fairly strong jump in the number of residential real estate transactions in Kohala, and rising prices as inventory became tight at the lower price points.
Kohala Residential Real Estate Market Trends Continue Into 2019
To summarize the real estate market trend over the past three years in Hawi, Kapaau, and beyond:
- 50 homes sold in 2019, the same as in 2017 and slightly higher than in 2018
- Median home sale price rose from $385,000 in 2017 to $490,000 in 2018 and $511,250 in 2019
- Residential real estate prices continue to be stable to slightly up
- The lowest price in 2019 was $128,000 for a tear down on a small lot; the highest $2,750,000 for an oceanfront estate
To be clear, the increase in median price is not saying that the same “average” home sold for a third more money than two years ago. Median is the price at which half the homes sold for less and half the homes sold for more. The main factor driving this higher was more sales in mid-range, which I define as the $600,000 – $1,000,000 homes.
Under $400,000: Opportunities Remain For First Time Home Buyers And Investors
In 2008 the lowest priced home sale in North Kohala was $345,000. Compare that with 2019, when there were 14 sales for less than that price! What do you get for a house under $400,000?
At the peak in 2005-2008, a plantation-era single wall construction home of under 1000 square feet with no improvements could sell for $375,000. That same home, after the crash, would have sold for $175,000 — approximately the value of the vacant lot. In todayʻs market, $375,000 would buy a plantation-era home with some level of renovation and a newer roof.
In fact, in this market we see investors buy homes that are in such poor condition that they require a cash sale, and have them remodeled and back on the market a year later, ready for a first-time buyer who can qualify for financing at todayʻs low interest rates but with little ready cash to spend on repairs.
Kohala Home Prices Have Not Returned to Peak Levels
The harder question to answer is how much prices have risen in this market cycle…meaning how much a particular home or type of home increased in value since 2009. On the Mainland, housing prices have recovered to pre-2008 levels in most markets and have reached new highs in many markets. That does not appear to be the case in North Kohala.
Overall, prices seem to have risen less than 50% from the bottom of the market. Where we have a home sold more than once in the past three years, prices are up at most 10-12% for a home in pretty much the same condition as the previous sale.
Another notable observation is the marketʻs preference for “turnkey” homes. There are very few brand new developer or “spec” homes in North Kohala. Since most of our sales over $600,000 are to buyers relocating from elsewhere, it seems a coat of paint, new appliances, remodeled bathrooms, and beautiful landscaping are the key to higher prices and lower days on market. This is especially true in the $600,000 – $1 million segment of the market.
Outlook for 2020 in North Kohala Real Estate
The year 2020 is starting off strong, with 10 properties already in escrow. The range of list prices for these pending sales mirrors the market overall, from $365,000 to $1,875,000.
There are 39 active listings, and the range of list prices is skewed relative to the distribution of sales over the past few years. In other words, the median price of the listings is $699,500 — and only 38% of the listings are below $600,000, while 50% of last year’s sales were lower.
For buyers, that means well-priced listings under the median will sell quickly, so donʻt hesitate to make an offer. It also explains why many sellers at the over $1 million level have taken price reductions at the beginning of the winter selling season, providing comfort for buyers in Kohala that their downside risk is limited.
I am never shy with my opinions about the listings on the market, so please call or email if you have questions!