Kona Kohala Blog

This week's Aloha Friday has hit the stands with information on real estate in West Hawaii, North Kona and South Kohala.  In this week's edition there is also info on a great new listing in the Bayview Estates subdivision in Keauhou, an update on mortgage interest rates and a look at a possible housing shortage coming up.

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Prices for condos in North Kona have been moving up this month but are still down year to date.  In South Kohala, prices continue their downward trend inching lower as activity continues to improve.  The number of sales for both condos and Single Family Residences (SFR's) are up in August compared to last August and up this year compared to last for year to date sales.

Activity in North Kona is also increasing as more people step in to take advantage of the low prices and crazy low interest rates.  There are 30 year fixed rate loans available under 4% with a couple of points up front.  Ten year mortgages have been as low as 3% recently and are hovering there today.

To hear it from the horses mouth, check out loan officers under Financing in the Buyer's Information section.  There's never been a time like now.

The number of listings in South Kohala and North Kona don't seem to be changing much but the price ranges do

The Single Family Residences (SFR's) in North Kona are mostly under the $1M mark and the bulk of those are under $500,000.  This is where we've seen most of the sales over the last couple of years as first time home buyers and investors scoop up the good deals while taking advantage of the low interest rates.

North Kona condos are also in the under $500,000 range with many of them under $200,000 giving both home buyers and investors lots to choose from if they're looking for a condo.  In South Kohala the largest numbers of both SFR's and condos are found under $500,000 also.

Most of our buyers today are retirees or soon to be retirees along with some first timers, those who can qualify, and investors, many of whom are using cash for their purchases.

Prices continue their slide even though the number of sales and the volume of sales continues to rise.  You can buy a condo nearly in town, a one bedroom, one bath, for around $70,000.  The maintenance fee on this one is just over $400 per month making it reasonable.  If you lived here, you wouldn't need a car, you have access to Kailua town and everything Alii Drive has to offer as far as surf spots, swimming and body surfing or just hanging out at the beach.

If you didn't need to live there, you could convert it to a rental unit and, depending on how much you financed, cover your costs.  Kailua Kona is not shrinking, in fact, west Hawaii is the fastest growing place in the Hawaiian islands these days.  With a recovered economy in 5 to 10 years, picking up a condo like this may be a very smart move.  Worth thinking about.

Believe it or not we actually have a seller's market in the north end of the North Kona District of the big island.  If we look at the Single Family Residences priced to $499,999 in Section 3 of Zone 7 which includes Kona Palisades, Koloko Mauka, Wonderview, and surrounding areas, we find 106 sales within the last 12 months.  There are currently 52 listed for sale which means there is a 5.89 month supply of homes on the market.  A six month supply is considered a balanced market and anything less than that is considered a seller's market while anything more is considered a buyer's market, what we've had for the past few years.

In the Keauhou area, Section 8 of Zone 7 of Hawaii Island, there are only 37 homes listed for sale with 19 under the one million dollar mark and 18 over.  There have been 12 listings sold under $1M in the last 12 months and only 7 over $1M.  This is giving us a strong  buyer's market in the area with a 23.4 month supply of homes in all price ranges.  If we look at just the SFR's over $1M with 7 sold and 18 for sale, we get a 30.9 month supply, a marked difference from the 5.89 month supply in Section 3.

Since the market began picking up in July of 2009 we've watched the lowest priced properties sell and that trend is continuing today.

This could all change rapidly as the economy fluctuates like crazy as we see knee jerk reaction after knee jerk reaction taking place around the world right now but, this is what the past 7 months looks like.

Over all it's been pretty flat with condos in Kona seeking new lows, what a time to buy an investment property.  Homes in Waikoloa, mainly in the village, are looking attractive also.

I've tried to predict where the median price was going over the past few years and with a blanket prediction of down, I've been accurate and safe.  I even suggested that we would see a flattening out of prices through the summer and it appears that was accurate as well except, I thought we'd see some increases as the summer wore on.  Waikoloa is proving me right but the others seem to still be headed down.  With all that's going on in the world and the way people are reacting to the soap opera called Washington, I have no further predictions at this time for any kind of recovery.  I suspect things in general will be on hold until we see something stabile appear on the horizon and quite frankly, with all the infighting among our elected officials, all I see is haze on the horizon.

Interest rates can't get much better.  Late last week, just when we all thought we'd hit the bottom on Wednesday, a new bottom was hit on Thursday.  We now have 30 year fixed rate mortgages under 4% if you're willing to pay a couple of points for the loan.  Don't hold me to it since that number is bouncing around between 4% and 3.825% but where ever it ends up today, you can bet it's going to be close to a historic low.  The only problem remaining here is people going back to work  Until that happens I don't foresee anything but haze on the horizon.

In North Kona and South Kohala there is a flattening out of what was a continuous decline on the median price charts.

This shows January to July of 2011 for Single Family Residences (SFR's) and condos in South Kohala and North Kona.  The only category with any direction at all is the North Kona SFR's, the other three can't seem to figure out which way to go.

You might say that this chart represents our country as a whole right now, no one and no area of the economy seems to have a direction.  After long hours working on the latest soap opera out of Washington D.C. we are no better off than we were to start.  Consequently, the housing market is no better off but, if you're a buyer and can make it through the tangle of qualification requirements or have cash, you're sitting pretty.  There are still some very good deals out there and if you do have to finance your purchase, interest rates remain tantalizingly low so go for it.

Sales of both Single Family Residences (SFR's) and condos have improved in both South Kohala and North Kona while median price is also headed up by as much as 40% for condos in South Kohala.

Looking at the figures for Year to Date sales, South Kohala SFR's have improved by 34% and condos are up 40%.  In North Kona, SFR sales are up 7.1% and condos are up just 1.6%.  These numbers get stood on their heads when looking at just the month of July keeping in mind there are still 3 more days remaining for recording of sales and 5 days left for the reporting of these numbers.  For July the number of sales for SFR's in South Kohala are off by <18.8%> and condos are down <16.7%>.  In North Kona SFR's are up 8.7% for sales but condos are down <21.7%>.

Median price has dropped across the board in Year to Date figures.  In South Kohala both SFR's and condos are down slightly for the year but monthly, both show slight increases in price.  SFR's are at $370,000 which is up 2.1% and condos are at $425,000, up 6.4% over July of 2010.

In North Kona, SFR's are priced at $390,000 year to date figures which is off by <5.6%> compared to last years figures.  For just July the median price is $359,000 for SFR's and a lowly $132,000 for condos and that's down <40%> from July of 2010.  Looking at the Year to Date median price and North Kona condos are off <25.6%>.

There is still a lot of change happening in the market place here in West Hawaii and it's unclear which way it's headed.  It's always best to buy when you're ready and able and this wacky market is no different.

I've read recently that distressed properties on the whole are selling for about 20% less than non-distressed ones.  I just looked at the numbers in our MLS for North Kona and South Kohala and found a huge discrepancy between our numbers and the national numbers.

In South Kohala, the median sales price of a non-distressed Single Family Residence (SFR) for the last 6 months is $413,000 while a condo there has a median selling price of $465,000.  The short sale median price SFR in South Kohala was $297,500 and a bank owned (REO) there was $252,300.

In North Kona, the median price for SFR's, non-distressed, was $470,000 and condos were $180,000.  The short sale median price for SFR's was $339,000 and for REO's it was $306,000.

These numbers were calculated using figures from Hawaii Information Service, our MLS provider.  Their numbers are only as reliable as the agents who input the information and that can vary depending on how accurately an individual handles their numbers.  Worst case is that this gives a good idea of just how different prices in Hawaii are compared to the national averages.

This is why Realtors say that real estate is local.  Each market is very different from even an adjoining one.  Always work with a Realtor in the area in which you are interested.  That will be your best source of accurate information, at least as accurate as the agent inputting the data.

It seems that the real estate market in Hawaii and across the country is stalled with no sign of movement on the horizon.  No one at the state or federal level is making any move towards breaking up the log jams that have been created by the back log of foreclosures, short sales or the major banks hesitancy to make loans to even qualified individuals.

The lack of jobs is also a major log jam, how can you own your home or even rent a home if you're not working?

The results of all this is a real estate market in West Hawaii with good deals galore, excellent interest rates, if you can qualify, and no sign of prices going up in the near future.  This is a perfect market for buyers; you can take your time, find just the right property then grab it at a very good price.

Not all properties are all that desirable, some are in pretty bad shape.  There are lots of good ones though and this market allows a buyer the time to find that just right property.

It's a great time to be looking in North Kona or South Kohala and of course a great time to become preappoved for a loan.  Since there is no rush right now, starting with a bank or broker will give you time to get your affairs in order so that when you do find the right property you can make an offer.  Getting to the pre-approval point won't cost you anything but will save you time when you need it most, when you find the right one.

So go ahead and get preapproved and begin your search.  You can check all of our MLS by clicking here.  When you need help, contact me and we'll work together to finalize your choice(s).  It's a great time to kick back and look at your home for the future.