West Hawaii Real Estate Update: May 2024

VOLUME 21, ISSUE 5

I have frequently expressed my concerns about the condo market and the multiple challenges it faces, so I thought I would put our current market into perspective. The graph shows the last ten years of inventory.

image of a hula dancerAs you can see though rising the last few years, the numbers show that today’s inventory is not excessive. However, inventory is rising and with it most likely prices will start falling, although year-to-date they are not yet… but they need to start falling so we have viable housing options for locals and second homeowners who often turn into residents when they retire.

Now each owner wants as much as possible for their condo when the time comes to sell. No one blames them, but when you get no offers the market is telling you something about your pricing or your condo or both.

Personally I think it is also now much more about the carrying costs since they are much higher than they used to be. So prices have to drop to make the buyer’s initial investment work for them. Buyers will look at the fees, property taxes, and insurance to tell them if the asking price makes sense for them. Renovations and upgrades will also play a part in this for buyers since if not completed this will be an expense after the purchase. We can help with this last part.. call to find out more!

KONA – ALL PRICE POINTS – HISTORICAL CONDO INVENTORY

A historical graph of condo inventory in Kona

west hawaii real estate market snapshot

Post it notes with real estate sales numbers for Kona in April and May 2024

Testimonial

When we decided to let our home in Kona go, we knew of no realtors but we came across Gretchen. What a pleasant surprise! She was great from start to finish. The professional knowledge, work ethics, answering emails and phone calls were second to none. We are from Canada and our vacation condo was very dear to us. Having her take care of the sale and details was like having a family member selling our condo.

Dan Dollman & Brett Imeson

economic news

  • Good news on the weather front. The forecasters are predicting only 1-3 named storms in our area of the Pacific this year.
  • Tourism is declining so far this year in Hawaii. Vacation rentals are down 5% compared to last year, visitor arrivals dropped 5%, hotel occupancy dropped almost 2% and visitor spending dropped 4% year over year for March.
  • Alaska Airlines is offering a subscription program to give early access to fare sales. At $5 a month, it seems pretty inexpensive!
  • Well evidently we just don’t have a problem with cesspools. Our sewer system is in dire need of repair too and the EPA had to negotiate with Hawaii County over the mandatory minimum repairs needed by 2035. We have a 10-year history of violations… yikes!
  • Did you know Hawaii’s coral reefs are insured for hurricane damage?
  • The Nature Conservancy has purchased the policy for $106,000 annually.
  • The first permit was issued for a house in Lahaina this week.  Maui created a 15-day approval process… wow, can we get that?
  • Hawaii state unemployment is currently stagnant at a super low 3.1%. However, I sat next to a visitor the other day who couldn’t believe that a fast food burger at the airport was $20… not many can afford that price and the $17 minimum wage is driving it.

notes from gretchen

Vacation rentals have had a rough month here. The governor signed the bill to make it possible for all counties to change the existing vacation rental zoning without agreement from anyone… sigh. This will create all kinds of issues, but one of the best descriptions I have heard was written by a local lender in his weekly newsletter. Feel free to subscribe once you finish reading it here: www.hawaiimortgage.net/government-blames-stvr-owners

This is a taking of property rights and will face lawsuits I’m sure. These owners bought their properties with the zoning to do this type of rentals and removing that “right” without compensation is illegal. Maui has moved to do this to 2,000-plus rentals already.

A NATIONAL TREND

Mortgage lenders nationwide tracked how many second home buyers there were in 2023 from 2021 and it is down 65% and in 2024 down so far over 7%, that totals 72%… that is huge! So even if you assumed (big leap) that cash buyers were still the same, that has us almost at only 25% of the buyers we had three years ago!

In checking Kona, we are down from 263 condo sales at the end of April in 2021, to 114 this year or a 56% decrease. However, the median sales price rose dramatically from $415,000 in 2021 to $682,500 this April, or a 39% increase. Maybe that accounts for a large chunk of missing sales, besides rising maintenance fees and property taxes and those still high interest rates! The math isn’t working for buyers… just too expensive still. 

rentals in kona

Thought for the day

“If you don’t like the road you’re walking, start paving another one!”

~ Dolly Parton

out on the town

A view of sunset over the ocean
Always a beautiful view when you enjoy dinner at Huggo's!
Gretchen and Randy, out at a restaurant
Celebrating my birthday with Randy, at our favorite dinner spot.
A musician playing live music at a restaurant
Enjoying the live music at Huggo's.

Mahalo!

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

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