Last night I had dinner with friends at their home in an oceanfront community at Mauna Lani Resort. They are full-time residents who downsized after their proverbial nest was empty and retirement on the horizon, and they take full advantage of the Hawaii resort lifestyle. After the sun sank into the Pacific and the colors faded, our conversation of course wandered to the topic of “how’s the Kohala Coast resort real estate market?”
Sunset from 49 Black Sand Beach, Mauna Lani Resort oceanfront home for sale (MLS# 276792)
Resort Market Shifts from Investment to Lifestyle Purchases
My response to the “how’s the real estate market” question tends to be anecdotal rather than analytical. I commented that in my resort and North Hawaii residential real estate practice I am seeing primarily clients buying for their own use (second or retirement homes). This is in contrast to the kind of activity we saw during the market bottom, when many of our clients were investors picking up foreclosures (REOs) and short sales at distressed prices.
Another driving factor in my business is that many of those who put a toe in the Hawaii real estate waters as investors are now “trading up” for themselves. We are selling a condo for them and assisting in their search for a single family home. Or selling a smaller condo as their retirement or family needs will be more comfortably met in a larger condo or quieter community.
Kohala Waterfront (MLS# 270776) is a community where some of our condo investor clients have chosen to buy lots or homes for themselves
National Association of Realtors Investment & Vacation Home Buyers Survey
My personal observations about the buyer profile along the Kohala Coast match the findings of the National Association of Realtors annual survey of investment and vacation home buyers. In 2014, vacation home sales soared above their 2006 peak level, while investment purchases fell for the fourth straight year.
Overall, vacation home sales accounted for 21 percent of all residential real estate transactions in 2014, their highest market share since the survey was first conducted. Owner-occupied purchases declined to 60 percent from 67 percent in 2013.
The Association’s economist attributes this shift to affluent baby boomers moving closer to retirement, their net worth improving due to strong growth in the stock market, and their confidence in real estate as an attractive long-term investment.
Vacation home buyers on the Kohala Coast look for resort amenities like these at Halii Kai
Is Now a Good Time to Buy (or Sell) Real Estate in Hawaii?
The second most commonly asked question after “how’s the market?” is whether this is a good time to buy (or sell).
My honest answer is that unless you are strictly an investor, looking to time your purchases and sales to the market cycle, the right answer is if it is a good time in your life to buy or sell a second (third, fourth) home here, then it is a good time.
While we may be headed towards a bearish stock market and higher interest rates, that may or may not prove to have much effect on the level of real estate market activity – or on the prices of Hawaii second home and investment properties. According to the national statistics, around 30% of vacation home buyers paid cash; in our market I would estimate only maybe a third of our resort buyers finance.
Maybe your first purchase could be a condo with a great vacation rental track record being sold by one of our satisfied “trading up” investors?
Perfect place to start? This Fairways at Waikoloa Beach Resort condo is listed for $419,900 (MLS# 282041)
A hui hou,
Beth Thoma Robinson, R(B)