Princeville Condo Update – Is the tide turning?
In the middle of writing multiple offers for buyers on Princeville REO and short sale condos it’s a bit confusing comparing our local reality with what we’re hearing on national news. It sure seems like the tide is turning with an increase in buyer activity.
As a way of testing the waters, I looked at year-to-date saturation rates instead of national statistics, which can be very misleading when trying to understand Kauai’s micro-markets. NAR’s chief economist, Lawrence Yun often uses saturation rates when analyzing the health of real estate markets.
What is a saturation rate?
It’s not the North Shore rainfall…but means how long would it take to sell the current active inventory. At the end of 2009 I did analysis for residential sales in each area of the island, broken down into price categories. To see what’s changed in the past 6 months, this graph compares Year-End 2009 to first half of 2010 for North Shore single family homes.
Kauai North Shore Q2 2010 Saturation Rates
As you can see, there is considerable improvement – especially for homes priced under $1M. For homes priced above $1M, the news isn’t as good. As noted in Kauai Luxury Market – Bouncing Back or Still Bouncing the Kauai luxury market still has more inventory than buyers – which makes it a great time to buy.
Before you get too excited about a recovery, let’s look at Kauai MLS statistics YTD end of June 2010 for residential single family homes and condos:
Kauai MLS Statistics - June 2010
What does all that tell us? It’s pretty clear we are in the recovery process that Hawaii leading economist Paul Brewbaker predicted when he addressed the Kauai Board of Realtors in August 2008. When asked what the recovery would look like, he predicted it would be similar to after Hurricane Iniki where we’d “bounce along the bottom” – then number of sales would slowly increase. As demand starts to grow, then the values would start to rise. It’s unclear when values will increase, probably not any time soon. But there is a dramatic increase in buyer activity.
Here’s Brewbaker’s chart showing the recovery after Hurricane Iniki – see any similarities?
Paul Brewbaker KBR August 2008
If you’d like the entire Kauai MLS Year-to-date statistics and my saturation report comparing 2009 to June YTD 2010, just email me at susie@koakauai.com.
Please add your insights to the Kauai market below. Do you see the tide turning?
All data has been supplied by third parties and has not been independently verified by Hawaii Information Service and is, therefore, not guaranteed.
A recent Wall Street Journal article titled “Luxury Home Sales Bounce Back” highlights the San Francisco housing market at prices over $2 Million.
After a near-disastrous 2009, the luxury market appears to be making a comeback, driven by growing buyer confidence, improved financing conditions and more-realistic seller pricing. Despite the housing downturn, attractively priced homes in some of the nation’s most coveted neighborhoods are selling, sometimes fast and sometimes with multiple offers. Nationwide, sales of homes selling for $2 million to $5 million in the first quarter totaled 2,461, up 32% from a year before, says CoreLogic.
That sales are up from last year shouldn’t come as a big surprise. The shock of the financial panic in the fall of 2008 left many potential buyers too nervous to bid, and those who were willing to wade in found it hard to get financing. But a study for The Wall Street Journal by MDA DataQuick, a real-estate data provider, found that in some areas of the country, sales of homes over $2 million in the first quarter were actually on par with the levels of 2005, the peak year for existing-home sales volume nationwide.
On Kauai, however, the numbers don’t fit the national statistics quoted above. Looking at the first quarter of 2010, there were 3 sales above $2M. In the same 3 months of 2005 there were 16 sales above $2M.
For sellers who follow national news, this type of article can create a false perspective on our local market. It’s important to work with your local real estate expert and base pricing decisions on real market data specific to your property.
For buyers, that means now is still one of the best times ever to buy a luxury home on Kauai. There are more choices within this limited market segment, and prices are very attractive. Now’s the time to negotiate. For instance, this beautiful ocean view luxury home on Anini Vista was recently lowered to $9.6M – MLS 205189 / Photos:
Update:
Just days after publishing this post, the San Francisco Chronicle ran the following article;
Once again, conflicting news reports add confusion. For Kauai luxury home owners, it’s very important that you work with detailed market analysis targeted for your property and your area. Keep in mind that we are not yet out of this financial nightmare. The recent increase in number of sales is primarily at the bottom-end of the market, and not a sign that the luxury home values are on the rise. You’ll need to be realistic about your situation as well as the market. For a complete market update, and information on your options, please contact me.
Aloha vs. Red Carpet – Hollywood North Shore Style
The respect and aloha so deeply a part of local culture makes Kauai’s North Shore a welcome second home to many famous Hollywood stars and musicians. Being able to relax, enjoy the beaches, local shopping and restaurants where people respect privacy and extend true aloha.
You never know when you’ll see Penelope Cruz shopping…or, the other day I had to wait for lighting specs to be complete before I could get into my driveway:
It’s understandable why film crews enjoy their time on Kauai – not only the natural beauty, but the warm aloha so unique to our island lifestyle. As the Descendent’s crew is leaving, Adam Sandler’s film is ramping up and of course we have the ‘Pirates of the Caribbean’ on island, too.
Ever wonder what happened after viewing a home, or watching a video walk-through?
This Princeville REO home with Bali Hai views was purchased by the previous owner in September 2005 for $1,067,000. After an unsuccessful short sale offering, the lender bought it back at auction in December 2009 for $529,000.
- Originally listed at $650,000, there were several price drops…
- Reduced to $597,000 February 4th
- In escrow on March 3rd
- Price further reduced to $567,00 on March 11th
- Closed today for $490,000 (buyer used a conventional loan).
- MLS 227993 Listing Details
For market updates on Princeville REO and Short Sale listings, send me a note…
Real Estate Market gets Dual Diagnosis
This morning, Les Christie of CNNMoney.com diagnosed the real estate market as ‘Bipolar’…
Bipolar is what comes to mind when diagnosing the post-homebuyer tax credit market. There are two separate forces pulling it in opposite directions, and experts aren’t yet sure which path the market will take.On one hand, sales and prices are rising, indicating recovery. On the other hand, so are interest rates and repossessions, which most certainly do not. And then there are the millions of foreclosures that need to be sold but haven’t yet been listed — so-called shadow inventory — that could derail a real recovery if they hit the market in floods….read full article
The ups and downs and conflicting direction of national news, as well as local statistics is enough
to make buyers and sellers seek medication. On Kauai, the $8,000 Homebuyer Credit didn’t have as much pull as on the mainland, and the ‘hangover’ mentioned in the above article isn’t as noticeable.
However, the uncertainties of rising interest rates, new foreclosures and shadow inventory are headache material.
Buying a property on Kauai is more than just buying a home – it’s putting dreams into reality. Seeing past the headache and worries from other markets, it may be the time to do as Warren Buffet says; “Buy when others are selling, and sell when others are buying.”
3 Reasons to buy Kauai real estate now;
- Interest rates are poised to increase (no debate about that). Money will cost more as you wait.
- Market fluctuations are likely to continue, but with the number of sales increasing – there’s more competition than last year for desirable properties. You’ll need to be willing to weather through the ups & downs of the next 1-2 years. Real estate has always been a long-term investment. If it makes sense for your 5 years goals, worth trying!
- Foreclosure values are setting the market – now’s a great time to negotiate on non-foreclosures using short sale and REO comparables.
For more information on the Kauai real estate market, contact me. I’m here to help.
Kauai Market Update – “Pin the tail on the donkey??”
Where’s the market? Tracking Kauai market statistics and conflicting national foreclosure news 
makes me feel like I’m blindfolded, being spun around trying to find ‘the bottom.’
As you can see from the weekly news highlights below, reports are all over the map. Up, down and in between. Within the small island of Kauai, we also have ‘micro-markets’ with wide ranges in values and sales results.
As one much wiser than myself said, calling “the bottom” is an historical event. We won’t really know it until it’s already happened. However, Kauai’s MLS statistics for April show some significant trends. Island-wide the number of residential sales are up 69% compared to April 2009. However, median sales prices are only up 2.86%.
Almost two years ago, when asked what would a market recovery look like, Paul Brewbaker, SVP and Chief Economist, Bank of Hawaii, said that it would be similar to Kauai’s recovery after Hurricane Iniki. There would be a ‘tranquil’ period with very few sales, then the number of sales would start to increase which would gradually drive the values up as shown below:
Kauai Real Estate Sales Volume
Additional market insights from Paul Brewbaker;
- KGMB News report “Revenues Council forecast improving economy in Hawaii” includes an interview with Paul Brewbaker, Council of Revenues Chair.
Although we may not be able to call “the bottom” and it’s unclear where the foreclosure market is really headed, it is significant that the number of sales has increased so dramatically. It just may be the perfect time to jump into the Kauai market and set your dreams in motion.
Let us know your thoughts… is now the time to buy?
This week’s foreclosure and market news highlights:
- Q1 Hawaii resort home sales up 20% compared to 2009 – Pacific Business News
- Foreclosure filings decline 9% in April – LA Times
- Foreclosures continue to rise as banks work on backlog – Washington Post
- Bay Area Foreclosures Down – KCBS
- Millions could still lose their homes to foreclosure – Associated Press
Kauai Short Sale and REO Market Updates:
Kauai REO Market Speeds Up
It’s not just an illusion – Kauai REO real estate listings are moving faster. We’re not quite at “Gone in 60 Seconds” but with 2 of the 4 new listings this week already gone…getting close. Wonder if Nicolas Cage and Angelina Jolie are available? Actually, since Cage faced foreclosure…perhaps he’d volunteer.
On Kauai this week there are 4 new REO listings, and 8 REO escrows! The Kai Ikena new listing already has multiple offers, and the lender will be selecting one on Monday.
4421 Kai Ikena REO
New Listings:
- $272,250 / MLS 234648; Kapa’a Oceanfront 2 bd / 1 ba – zoned for both Residential and Commercial. 746 sq ft living space, 4,980 sq ft lot
- $259,900 / MLS 234563; 7870 Ao Place, Kekaha; 3 bd / 1 ba Residence, 864 sq ft living space on 6,008 sq ft lot.
- $549,900 / MLS 234675; 4421 Kai Ikena Drive, Kalaheo, HI; 3 bd / 3 ba Residence with ocean views from living area, and downstairs “mother-in-law”; 1,774 sq ft living space on 8,388 sq ft lot. Multiple offers.
- $485,000 / MLS 234252; Regency Huleia #24; 3 bd / 2 ba townhome. Regency Huleia Map. In Escrow!
Full Kauai REO Market Report:
- Kauai REO Listing Update Report – May 2-9, 2010
- Update….Kauai REO Market Report – week ending May 16, 2010
More Information:
- How to Buy an REO
- Foreclosure Home Sales Rise – Kauai Garden Island News
To stay on top of the Kauai REO market, contact me and we’ll set up a strategy for your success.
Vacation Rental Reversal on Kauai Ag Land?
Kauai real estate buyers often are overwhelmed trying to understand all the zoning issues and variances on such a small island. The vacation rental ordinance is a prime example. A recent Garden Island news story – Vacation Rental Reversal – covers proposed changes to the law.
One local attorney described the original bill as legal spaghetti. Multiple legal actions have resulted, and now the County is proposing an amendment which would allow vacation rentals on agriculturally zoned property to apply for a permit.
The exclusion of agriculturally zoned properties has already created a huge financial loss for many Kauai homeowners. It also doesn’t help our struggling tourist economy as many visitors prefer to stay in private homes, experiencing Kauai away from hotels and resorts.
As an example, this gorgeous ocean view home was recently sold due to the fact that the owner could no longer do vacation rentals:
Please read the full story, and let us know your thoughts! Is this more legal spaghetti?
3 Tips for Buying a Kauai Foreclosure
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Find an experienced Buyers Agent who you feel comfortable with, then make a commitment to work with them. My clients usually sign a Buyers Agreement with me so that we are all clear about what our working relationship is, and in that sense – they’ve “hired” me to work for them, even though I’m paid via the seller’s commission.
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Prepare – Prequalify with a Hawaii lender and provide Proof of Cash Funds. When you’re negotiating on a foreclosure or short sale, remember it’s a bank reviewing your offer. They want to see that you’ve taken the time to prequalify – they’ll want another lender’s opinion as to your ability to purchase. It may sound strange, but your agent should ask you for your Proof of Cash Funds to submit with your offer. Please feel free to contact me for more information about what this is and why.
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Be Ready to Act Quickly! Emotionally this can be the most difficult. But foreclosure offerings on Kauai are moving quickly. It’s important that with all the homework you’ve done by working with an agent, staying in touch with the market, prequalifying – that you pace yourselves to be ready to write an offer right away if you see something you like. What I tell my clients is to remember that “an accepted offer only means you’ve secured the opportunty to buy.” The ball is then in your court to say YES or NO…. but waiting means someone else will be first in line and at best, we’ll be able to write a back-up offer.
For more information about the Kauai foreclosure market, be sure to subscribe to this blog. To get started on your search, email me at susie@koakauai.com. I’m here to help.
