For over a decade I have written an annual recap of real estate sales from Hawi to Kapaau and east. I always exclude the lower North Kohala subdivisions and write about them separately. You might want to start by reading 2019ʻs market review for comparison. The bottom line for 2020: a combination of pandemic-driven buying and historically low interest rates increased the number of sales and pushed up home prices in Kohala and throughout Hawaii in 2020.
Kohala Residential Home Sales Volume Strong in 2020
Prior to this year, homes in Kohala experienced gradually rising prices — around 3-4%/year since 2017 — as inventory became tight at the lower price points. In 2020, we saw prices climb even at the higher price points due to an increased number of buyers in that segment of the market.
- 65 homes sold in 2020 in Kohala compared with 50 homes in 2019
- The lowest home price in 2020 was $236,000 for a bank-owned home dating to the plantation era; the highest residential sale was $5,900,000 for the oceanfront estate at Puakea Bay Ranch.
- Prices have increased but, unlike many Mainland markets, are still below where they were at the peak 12 years ago.
Although the statistics show the median home sale price in Hawi/Kapaau rose from $511,250 in 2019, to $577,000 in 2020, the increase in median price is not saying that each home sold for 13% more than it would have last year. Median price refers to the distribution of sales; half the homes sold for less and half the homes sold for more. The main factor driving the median higher was the greater number of sales of expensive properties.
Opportunities for First Time Home Buyers
In 2008 the lowest priced home sale in Kohala was $345,000. In 2020, the lowest was $236,000 for a similar property, bank-owned after foreclosure. There were 23 home sales under $500,000 and the average price was $395,000. Mainly these were first-time homebuyers, thanks to low interest rates.
The 2020 median price of $395,000 for starter homes, with little or no down payment, translates into a mortgage cost (not including taxes and insurance) of $1,650/month at today’s rates just below 3%. In 2008 when the interest rate was more than double what it is today, that same monthly payment would have meant the buyer could only qualify for a $275,000 mortgage. That is why we see first time buyers in the $400,000 price range today. It would be hard to find a 3 bedroom rental in the area for that monthly payment!
With Kohala rents so high, the multifamily homes on the market could be good investment opportunities. I see a couple of well-maintained properties with two homes listed for under $700,000 that could be cash flow positive even with a mortgage…or live in one and rent the other!
Homes on Acreage Dominate Higher End Sales from Puakea Bay Ranch to Makapala
Homes that sold between $500,000 and $1,000,000 had a record year in upper North Kohala. There were 29 sales compared with 18 in 2019. This included three new homes in the Hanaula Village subdivision on 10,000 sq ft lots, but at this price point, most sales are homes on larger lots, 1-20 acres in size.
There were also 11 sales over $1 million, compared with 7 in 2020. Four of these were over $2 million compared with only one in 2019. Mostly these are malihini buyers, and the sellers also are either non-resident or returning to the Mainland. Some newcomers were looking for a second home that then became their primary residence as their stay extended because of the pandemic.
Three of the four sales over $2 million were at Puakea Bay Ranch, and one was the farm locals sometimes still call “the Kenny Loggins estate” after the original owner, which sold for $2.8 million. I represented the owner as seller, a long time client who received an unsolicited offer.
My next blog post will review the 2020 land sales in the Kohala region.