West Hawaii Real Estate Update: July 2023
VOLUME 20, ISSUE 7
The graph this month shows that we hit 421 sales for the first six months of the year. Very similar to 2007, so I think you can expect around 800 or so sales by the end of this year, compared to 2021 closings of 1,522. So almost a 50% difference.
The month of June actually performed very well and is so far the highest closing month of the year with 88 overall sales. Of those over half were under a million, 16 houses, 33 condos, and 6 pieces of land totaling 55 properties in all. Or over 62% of the sales… times they are a changing! And of those 55 sales 26 or 47% were all cash.
Inventory in houses edged up slightly to 77 in all price points, condos took a huge leap up from 28 in May to 52 in June, in what I think is a sign of what is to come. Pending sales dropped back down into the low 60’s overall, but most telling is that there are only 38 condos pending. We typically close half of our pendings each month so look for very low closing numbers next month.
With interest rates predicted to hit 8% watch for dramatically lower closings numbers each month and rising inventories. Once that happens, the pricing wars will start as some owners have to sell and won’t stick to their original sales prices. Financing will be pricey and difficult and cash will win the day (sorry lenders!).
We have been so pleased to work with Gretchen to sell our condo. The first time we met with her, she had done all her homework. She really studies the Hawaii real estate market and shares that information with her clients in ways that are easy to understand. She suggested doing a home inspection right away and had an incredible contractor make the repairs needed. She is very personable, has a positive outlook and a great sense of humor. We highly recommend Gretchen to anyone who needs a Realtor!
Kona Houses – Condos – Land sales by Year By Quarter
Notes from Gretchen
The UHERO report said that the median income was $81,000. It also showed that median owner costs are 27.8% of their income and that renters share of income for their costs was 33.8%. I’m sure some of those owners bought long ago.
So let’s say you make the median, and the median house in the report is $975,000. You want a loan, have no other debt and a good credit score. Today at 7.25% with 20% down (200K) your monthly payment is $5,321 plus property taxes and insurance of $700 a month, for a total of $6,000. You are short $40,000 in income.
That same scenario in the median condo price of $550,000 would be a $3,800 a month expense with a $100K down payment. You are short $27,000 in income to qualify for the loan.
The fourth draft is out and it has a few new items in it specifically focused on hosted vacation rentals. The document is long but here are the highlights from my perspective.
There is an exemption for healthcare workers renting as guests for shorter than 180 days–it does NOT take a permit!
If you have a cesspool and are in Priority Zone 1 or 2, you have to convert to septic sooner than the state requires (2050). You need to be before 2028/2030 respectively.
If you use a management company, they must provide their real estate license information. No more unlicensed managers allowed.
Must renew annually for hosted rentals.
Rentals in Kona
Thought for the Day
“Always remember that you are absolutely unique. Just like everyone else.”
~ Margaret Mead
Out on the Town
Well Kilauea is a fickle girl… after not flowing for several months she started back up on June 7th early in the morning and then suddenly stopped again on June 19th. I can’t ever recall such a short run in my 33 years here but I prefer my skies clear so it is just fine with me. However, all the tourism industries tied to it are suffering with less guests arriving to the island to see the majesty of when the lava is flowing.
Maybe you will be lucky enough catch her in action the next time you are here!
West Hawaii Real Estate Market Snapshot
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