Real Estate Market Report – Strong 2010 for North Kohala, Big Island
A couple of times a year I’m asked to write a short article about real estate for the Kohala Mountain News, our beloved monthly newspaper covering events and issues in North Kohala (the area around the towns of Hawi and Kapa’au). Here is a slightly edited version of the 2010 real estate market report that will be published in the February issue at the end of the month. Unfortunately, they don’t have an online edition, so this blog post will have to do.
The good news in the Kohala real estate market for 2010 was the high level of activity. The total of 38 residential sales was more than double the 17 homes sold in 2009 (this figure excludes the lower North Kohala communities of Kohala-by-the-Sea, Kohala Estates, and Kohala Ranch where an additional 14 homes sold).
Sales were recorded from $112,000 for a Halaula home badly damaged by the 2006 earthquake, to $1,850,000 for a newly-built residence in Puakea Bay Ranch. Surprisingly, the highest priced sale of the year was a distress sale, sold for less than the mortgage on it, meaning, essentially, for well below the cost of construction.
Distress sales were evident at the very low end as well as the very high end. In addition to the Puakea home, four short sales took place in more modest neighborhoods, such as Ainakea and Kynnersley Road. Seven bank-owned homes sold post-foreclosure, again spanning the neighborhoods with a Maliu Ridge home selling for only $470,050. Still, compared with markets such as Kailua Kona, or some of the resort condos, the percentage of distress sales (12 out of 38) was relatively low.
Eighteen homes sold for less than $300,000, which meant first-time home buyers found properties they could afford, most taking advantage of the tax credit available through April 2010.
The action in raw land was steady, with 13 parcels sold in 2010, versus 11 in 2009. The nature of the sales was quite different, with about half of the sales in 2009 taking place in gated subdivisions, while in 2010 the only such sale was at Puuepa (Lincoln Avenue Makai).
As I’ve blogged before, what buyers tell me is that if they have a long time horizon to build, they prefer lots outside of gated communities because of their lower holding costs. Other buyers don’t want restrictive CC&Rs, particularly ones requiring them to build a larger home than they feel they want or need in retirement. The desire for smaller homes is actually a trend reported nationally.
There were three pricey oceanfront parcels sold in 2009 (the most expensive at $2,675,000 in gated Ranch at Puakea), while the highest land sale in 2010 was a 42-acre parcel for $1,080,000. At the other end of the spectrum, two small lots on Kynnersley Road offered for $105,600 each were snapped up in 3 days. The sweet spot in 2010 in vacant land sales was in parcels of 3-5 acres with ocean view. Even lots at Maliu Ridge that had lingered for years were snapped up by buyers looking to call Kohala home.
In lower North Kohala, meaning the gated communities of Kohala-by-the-Sea and Kohala Ranch, along with non-gated Kohala Estates, land sales were strong in 2010, with 15 lots sold versus only nine the prior year.
Price reduced to $720,000 means this is a best buy at Maliu Ridge (MLS# 238114)
The question on the minds of most home buyers and sellers currently seems to be “Has the real estate market bottomed out?” Although there are still a handful of properties in some stage of foreclosure process in Kohala, the worst does indeed seem to be behind us. With many quality residential properties listed at below replacement cost, showing activity seems strong at the higher ($1-$2 million) end as we begin the year.
There are four Maliu Ridge homes now listed below $800,000, so activity should be strong in that upscale neighborhood. Moderately priced homes in good enough condition to be financed are in very short supply, which should stabilize prices in North Kohala as the year progresses.