Back in April, I wrote that sales in the Kohala Coast real estate market were strong in the over $1 million segment. Judging from appraisals we’ve seen on recent sales, the entire Kohala Coast condo market has now officially turned the corner: appraisers are no longer considering it a declining market! In looking specifically at Kolea at Waikoloa Beach Resort, where distress sales had dominated in both condos and single family homes in 2010 and 2011, the first half of 2012 price news is pretty stunning.
Kolea 8C (MLS# 230228) is the only front-facing penthouse currently for sale
Gap Widens Between Distress and “Market” Sale Prices at Kolea
Taking it from the top, we can see how a combination of fewer distress sales and sharply diminished inventory contributed to a rising market for Kolea condo prices. So far in 2012, there have been eight sales, of which there was only one bank-owned property and two short sales. There are four condos in escrow (three of them unfortunately in “short sale hell”). That adds up to 12 sold/in escrow…and only six active condo listings, fewer than half the number at the start of the year, and half the number of sales year-to-date!
There is a huge disparity between pricing for distressed condos sold in the 12-plex Kolea buildings and those of the two active listings of the same floor plan. The most recent closings on the interior 2 bedrooms were $479,000 for a 3rd floor short sale, and $436,000 for a 1st floor REO (bank-owned property after foreclosure).
The two active listings of the same floor plan are priced at over $800,000! With appraisers limited to sold comps, at this point the market is looking for cash buyers…and a buyer who has finally accepted that there will not be another Kolea condo offered at distress sale pricing.
A shift in buyer expectations is exactly what transpired this year in the 6-plex buildings. Although one of the short sales was a 2nd floor villa closed for $1,135,000…two smaller, ground floor villas sold for $1,175,000 and $1,200,000! It looks like for the row facing the Kolea Beach Club, there will be no more ground floor sales below $1 million, and no more top floor sales below $2 million. Remember…even if there were another distress sale, banks will price using recent sold comps.
Luxury Home at Waikoloa Beach Resort is Not an Oxymoron
The one point on which I was happily proven wrong in the past six months, is that at the upper level Kolea sold strongly compared with the competition at Mauna Lani and Mauna Kea resorts. Of six condos sold for over $2 million along the Kohala Coast, two of them were Kolea penthouses. A third is still in escrow.
The primary competition for buyers at this price level wanting proximity to the beach this year was Kauna’oa at Mauna Kea; that developer has only one home remaining. It is apparent that the old taint to Waikoloa Beach Resort as being less up-scale than its neighbors to the north does not affect Kolea sales.
As far as residential listings, Lot 16 is in escrow at an asking price of $2,600,000; lot 5 is asking $5,995,000. Prospective buyers seem to be mentally stuck in last year’s $3-$4 million range. When homes were available below replacement cost, lot sales were inhibited. Now that is no longer the case, and the two oceanfront lots that are bank-owned after foreclosure at Naupaka Place next door to Kolea seem ripe at asking prices of $2.3 million (full disclosure: the Naupaka lots are my listings, so I’m partial to enjoying sunsets from a lawn chair on the beach there).
A hui hou,
Beth Thoma Robinson, R(B)