Newsletter

West Hawaii Real Estate Update: February 2023

VOLUME 20, ISSUE 2

In 2004, Kona hit the top of its transaction peak, 1,600. It took two years for this indicator to drop 600 sales a year, which it did in 2006. This time we did almost the same thing but in one year. At the rate of current sales, I think we will skip a year again and drop to sales in or around the 800 a year number, like in 2007. That would be a 50% drop.

Now the big question is, will sales prices follow? So far, inventory is not and until it increases, I don’t think sales prices will fall off the map. However, sales are slowing making this a possibility. Total sales for houses, condos and land in January was 47. The last time sales were that low was 2010, and we also sold roughly 800 units that year too.  The good news, if there is some here, is that I think we may skip the really terrible times of 2008/2009 since so many homeowners have low-interest rate loans and were well-qualified when they bought with a loan or paid cash, unlike the last time. If they have to move off-island, they will rent the property until their values return.

As the graph clearly shows, we drop much faster in transaction count than when we grow. Growing takes a decade or more to recover to these peaks but we do always get back to them and the underlying higher property prices these represent.  

Questions? Call me!

Testimonial

Thank you for your patience, persistence, and professionalism. While working abroad for the last five years, you supported my pursuit to be close to my son and his family, whom you had previously represented in the purchase of a Kona home. When it finally came time to lock in a deal to coincide with my move from Thailand, you came through with the right opportunity. You certainly know how to get the deal done for customers moving to the Big Island!

R. Dunn

Kona Houses, condos & land – All Price Points By Quarter

Economic News

  • Roof-top solar installations soared in 2022 at 1,536, more than double 2021. Those super high electric bills now reach 50-cents a kilowatt hour.
  • Birth rates declined in Hawaii by 14% between 2016 and 2021.
  • From July 2020 to July 2021, Hawaii state had the fourth-largest population drop in the U.S. losing 10,358 residents overall.
  • Hawaii County had an influx of over 15,000 new residents from 2010 to 2020, according to the most recent census report. That’s 1,500 every year for 10 years.
  • Those 65 and older in the state now make up 20% vs. 14% in 2010.
  • Over half of Big Island residents do not work! Our employed head count is 94,440 out of 200,629 residents, leading to an unemployment rate of just 3.8% in December. Wow, that’s a lot of retired people and kids!
  • Hawaii hotel occupancy in 2022 was only 73.6% compared to 2019 at 80.8%… BUT, the room rates increased so dramatically that revenue was up 23%!
  • Hawaii was the top U.S. market for room revenue, and New York was #2 in 2022. In occupancy, New York was 1% higher at 74.8% and took that top spot with Hawaii being #2.
  • Compared to the top 15 worldwide “sun and sea” destinations, all 4 Hawaii counties ranked among the top 9 in room revenue.
  • Safeway is adding a gas station!

Notes from Gretchen

The economics section this month talks a lot about hotel room revenue, but what it really highlights is room rates that you pay. It shows that profit margins on room rates is through the roof these last few years and at the same time fewer guests are wanting daily cleaning when they stay, reducing hotels expenses. Instead of dropping their rates to reflect this they are keeping them high.

The law of supply and demand is driving this, but it doesn’t always work in our favor. Our dropping visitor arrivals (down 8.5% this year) is a trend that could affect our future. I would say like house prices, this tourism indicator of high room rates and falling arrivals, spells a downturn for the industry and Hawaii economics soon.

TAR (Formerly STVR)

Rentals in Kona

Available Soon — March 2023

Alii Villas 1BD/1BA Furnished, 3rd Floor Condo in Oceanfront Complex
Alii Villas 1BD/1BA Furnished, 3rd Floor Condo in Oceanfront Complex

Thought for the Day

“The best way to cheer yourself is to try to cheer someone else up.”

~ Mark Twain

Out on the Town

A sunset view from Huggo’s
A sunset view from Huggo’s

West Hawaii Real Estate Market Snapshot

Quicklinks

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