Well we're almost at the end of the first week of 2008 and the Kauai real estate market is heating up. It's fairly easy to tell by the traffic jams in Kapaa and Puhi that the island is crawling with tourists. Not to mention the long waits at the tee box while golfing at the Wailua county golf course. And when tourists come to the neighbor islands ( Kauai, Maui, Hawaii ) that means good news for the Kauai real estate industry. The numbers from 2007 are now official and here's one man's observations. Listed above are the totals for the three categories that our MLS, Hawaii Information Service tracks. They are:
1. Total Sales
2. Total Sales Volume
3. Median Price
For space saving sake, I've include only the entire island totals. Kauai is divided into five zones. If you want to look at the numbers for each zone and view the total report, CLICK HERE to DOWNLOAD all the numbers for the Kauai Real Estate market.
So, let's look at few items. First, the total number of transactions/sales is down 42% for the year. Not sure how that compares with the many resort markets around America, but I'd be interested in hearing from any AR members about the numbers in their market. Remember, on an island in the middle of the sea where the median price of a home is still $650,000, the majority of our sales are to folks from the mainland, Europe, Japan, Canada and a few other places. With the constant bombardment of news about the housing industry, the lending industry, and now the impending recession, there are not as many investors in the market as before in the boom market. That relegates us to folks wanting to move here for the slower pace and tropical lifestyle, people who can afford to have a second home here, and those who are retiring to the islands. Sure, when Costco opened on the island in October '06, they brought a slew of folks from their operations around the mainland and some bought homes, but on an island of approximately 64,000 people, there will only be one Costco.
Interestingly enough, while the # of transactions are down 42%, volume is only down 27%. Looking more closely, the volume of residential sales was down only 10%, but the volume of land sales was down over 38% and the sales volume of condo sales was down 41%. It appears that the areas that experienced the greatest appreciation from 2001 through 2005, are correcting the most and I suppose that is simply common sense. The Princeville condo market has experienced substantial adjustment and yet the median price of a condo in Princeville went up almost 150,000 due to one new project, Kai`iulani. Although the Kai`iulani sales were made in '05 and '06 and '07, they did not begin closing units until '07. If one removes the Kai`iulani closings from the Princeville condo market, then the number of units and volume of sales in the Princeville resort area would be down even further.
On The South Shore, home of Poipu Beach in the Koloa district, Poipu condo sales were only down 10% in numbers of units and volume of sales. So the land and condo markets have been the softest areas of the market and seller's will continue in 2008 to provide incentives like 3-2-1 buydowns and prepaying maintenance fees, closing costs, and the like, to continue to stimulate the sluggish kauai condo market.
One of the product categories that is not visible when you look at these numbers are the condotels. For those of you who may be unfamiliar with the term, this is a hotel whose rooms have been renovated then resold as a fee simple condominium. There are three such projects on the east side in Kapaa and Lihue, and in these projects,between 25% to 45% of the inventory is currently on market with only a small smattering of sales. Most of the buyers who purchased at these projects were speculators looking for either a short term or medium term flip. Depending on how a particular buyer financed their purchase, many owners are upside down and bleeding with a negative cash flow at these projects. I suspect significant downward pressure at these projects, the Waipouli Beach Resort, the Hilton Kauai Beach Resort, and the Islander on the Beach. On the flip side, it is an excellent time for a buyer who wants this type of property! There are many motivated sellers right now.
Well, so much for one's mans view of the 2007 market. It's onward and upward in 2008. Kauai is a special and beautiful place. It is the unique combination of American convenience and amenities combined with the quirkiness of a third-world country all surrounded by the most magnificent oceans, mountains, valleys and nature that one could imagine. Fortunately, the high end of the market is better than ever, and despite the large amount of inventory for sale, in the bigger picture, the inventory is small. If you know of anyone looking for a piece of this Kauai paradise, I'd be delighted to share my insights of the kauai real estate market, and provide the quality service that you would expect from an Accredited Buyer's Representative. And of course, we love referrals.
Ron Margolis, RA, CDPE, ABR Hawaii Life Real Estate Services 808.346.7095 email: firstname.lastname@example.org