North Kohala (Hawi to Kapaau) Home Sales 2023

I like to start off each year with a review of the real estate markets in the key neighborhoods in which I am active. I have done so on the Hawaii Life website for 14 years now! This report covers home sales in the portion of North Kohala with Hawi and Kapaʻau zip codes, and a separate report covers the Kohala gated communities near Kawaihae. Here are links to the 2022 North Kohala residential market report, and the same Hawi to Kapaʻau market report for 2021.

Hoea Road Five Acre Farm with Small Home for Sale in rural Hawi North Kohala (pigs not included) – MLS 669788

Kohala Home Sales Slow and Prices Hold Steady Due to Lack of Inventory

Although all real estate is local, in many respects this local market mirrored national and statewide real estate trends for 2023. With so much inventory sold in the preceding two years, Kohala real estate sales activity slowed in the second half of 2022, and prices stabilized after two years of rapid growth. That lack of inventory resulted in an even slower pace of sales in 2023. Interestingly, the 33 sales in 2023 was exactly the same pace indicated by the 17 sales in the second half of 2022. The median price was up only slightly, but the lowest priced homes sold for $500,000 — the highest ever “low” home price for a year of sales in North Kohala.

In summary:

• 33 homes sold in 2023 in Kohala, compared with 54 homes in 2022.
• The lowest priced homes sold for $ 500,000. This is a record high for the “lowest” priced home.
• The highest price sale was $ 3,900,000 for a newer contemporary styled home on 20 acres in the Puuepa gated subdivision.
• The median home sale price rose from $511,250 in 2019 to $577,000 in 2020 to $605,000 in 2021 to $777,375 in 2022 to $837,000 in 2023. That median price was for a home with 1,680 sq ft on a small lot (for this area) of 9,375 sq ft within walking distance of Hawi. That price point used to buy a home on acreage, but those homes are all listed well over $1 million today.
• There are currently 22 homes for sale in Hawi and Kapaʻau, a slight increase in inventory. The least expensive is $319,900 for foreclosure that will require a cash buyer. The most expensive is $4,495,000 for two parcels totaling 141 acres, with farm equipment and a home intended as a farm manager cottage; this was also the highest priced listing at this time last year.

Although many prospective buyers say they are looking for acreage and plan to “grow food” or have horses or other animals, true agricultural properties tend to sell less quickly than strictly residential listings.

Half of the sales were all-cash and the rest were financed, despite interest rates that rose to over 7% before easing again towards the end of 2023.

Residential Real Estate Outlook for 2024 in North Kohala

I could pretty much just copy my conclusions from last year in predicting the 2024 real estate market for North Kohala. I believe that 2024 will look similar to 2023 with a few differences.

As I said a year ago, “Real estate markets are cyclical but not all cycles are alike.”

• The first factor supporting continued lack of inventory is a national trend. Unlike the previous cycle that ended with a precipitous crash in late 2008 and found many homeowners underwater with mortgages they could not afford, now we see homeowners who “cannot afford to move.” In other words, having locked in a 3% or 4% interest rate, an owner who needs to finance their new purchase is looking at an interest rate and mortgage in some cases twice their current one! So interest rates cycles have created an inventory shortage this time, rather than a glut of homes for sale.
• The second factor supporting continued lack of inventory is the wrong prediction that many people who bought in Hawaiʻi during the pandemic would leave after two years. That is not in evidence so far. We see limited profit-taking, and a few people needing to move back for their jobs – but not more so than in any “normal” year.
• There is still significant demand for Hawi and Kapaʻau homes at all price points, and with limited housing stock and no new construction, homes prices are unlikely to drop significantly.
• Interest rate fluctuations have proven to have only a modest affect on sales, mostly at the very low end.
• For sellers, homes are taking longer to sell than the did two years ago, but still much less time than the norm in the 14 years I have tracked the market. As mentioned last year, homes priced in line with recent sales sell faster than those with ambitious price expectations. But that is true in any market.