Newsletter

West Hawaii Real Estate Update: January 2024

VOLUME 21, ISSUE 1

Different month, but still the same theme… not enough inventory and high interest rates. Inventory is still under 100 units for houses… condos are hanging in the 60-70 range available and land is in the mid-30’s.

Sales were up for houses by a whopping 11 units to 34 or a 32% increase. Condos were slow with just 14 sales, the lowest month of 2023, land sales were at 9.

Now watch for condo sales to slow down and inventory to rise with the huge increases in association fees. There are even a few complexes implementing or facing assessments also. This always makes a buyer hesitate, especially if the number hasn’t been established yet. Once the assessment is implemented, it eases the buyer’s mind.

The increases in fees are another story. They have been rapidly rising due to costs outside of the associations’ control: water, electric, insurance, landscaping wages, etc. Some complexes have had back-to-back double digit increases. One has gone up 50% in the last two years. These are the unintended consequences of raising electricity and water costs year in and year out. Raising the minimum wage for landscaping crews for instance, huge change! And then there is always insurance which in itself has probably gone up over 20% the last two years.

Kona – Houses – Condos – Land: Sale By Year by Quarter

A graph of real estate statistics for Kona, Hawaii showing sales by year by quarter, from 1992 to 2023.

west hawaii real estate market snapshot

Testimonial

Gretchen is fantastic. She worked tirelessly with us to help navigate through the complex process of buying a property. She’s patient, extremely communicative and thorough. I would also say she went above and beyond what we expected. She is well connected and her connections and local knowledge is a serious asset. We would recommend her to anyone!

Casey & Michelle

economic news

  • Good news for a change and something that is dropping! DUI’s! An 18% drop from 2022 to 2023. Only 215 arrests were made last year.

  • And another even more important one… fatal crashes… down 54% from 2022 to 2023 with only 14 last year!

  • On the insurance front, you can no longer buy earthquake insurance for post and pier construction… dang!

  • And yet another thing increasing… parking rates at all the airports. Used to cost $15 a day, now it will be $24 and all the other ranges increased as well.

  • And now for the really bad news… Hawaii is the most government indebted state with $13,681 per capita… the lowest was Idaho with $3,108… shoots!

  • Hawaii residents rank third highest in personal debt with the average carrying $82,650.

  • Hawaii is the 6th oldest state in the nation per residents’ ages. Deaths will exceed births over the next four to five years per the state House Finance Committee. Population growth will have to come from in-migration.

  • Vacation rentals and ohanas… here is a link to an article about the drastic changes the County wants to implement: bit.ly/VR-changes. This will create hardship for owners who rent part-time for 30-180 days. It will have HUGE fines attached, it has massive reporting requirements for information they already receive. Sigh… the list goes on.

notes from gretchen

The two big stories of this month are raising the minimum wage and the extreme regulation of vacation rentals.

To add to this, a few years ago the state decided it wanted to keep all of the TAT tax and not share with the counties… they let the counties add their own 3% tax. Overnight the TAT tax jumped from 10.25% to 13.25% plus 4.71% GET… that is 18% on top of every vacation rental!

Occupancy has plummeted down 25%. Now guests don’t look at the room rate, they look at how much the stay will cost them.

Increasing wages and restricting rentals will only make this worse. As we learned during COVID, we can’t survive without tourism… something’s got to give!

Minimum Wage Hike

The state in its wisdom has decided that the minimum wage should increase dramatically by $2 an hour to $14 in January 2024. So, if your employee works 40 hours a week that is $80 less you make and over $300 a month. Now that doesn’t take into consideration all the payroll taxes tied to that rate… sigh.

It also doesn’t consider how this has a cascading effect on your payroll structure causing others up the food-chain to need increases also to keep them current. Say your manager was making $14 an hour to manage a $12 an hour employee… now they are both $14? I don’t think so, you have to raise the manager to $16. And it goes on and on. Forcing owners out of business or to rely on technology instead of people. Watch for higher unemployment… bummer!

rentals in kona

Photo of the living room and bedroom of a condo in Kailua Village, in Kona Hawaii.
Photo of a kitchen and living room of a condo in Kailua Village, in Kona Hawaii.

Thought for the day

“Success is not final, failure is not fatal: it is the courage to continue that counts.”

~Winston Churchill

out on the town

A painting of a little house next to the ocean, with a palm tree wrapped in white lights next to the house.
This painting was created for us by Lorie Taylor for our 2023 Christmas card, and is now featured on our new website!

Mahalo!

As always, thank you for subscribing and reading my monthly newsletter! If
you have any real estate questions about West Hawaii please feel free
to call or email me today!

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