BIG ISLAND REAL ESTATE MARKET UPDATE – FEBRUARY 2023

Following the recent announcement that inflation may not be cooling off after all— with higher-than-expected consumer and producer prices in January— the average rate for a 30-year, fixed mortgage jumped to 6.62 percent, an increase of 23 basis points (.23 percent) from just seven days ago– the highest it has been since November.

On the Big Island, the # of single-family home sales is down nearly 39 percent YoY, and the median sales prices is down 3 percent YoY. Interestingly, though, while the # of condominium sales on the Big Island is also down– a whopping 49 percent YoY— the median sales price is up an equally staggering 27 percent YoY. (Source: Title Guaranty Hawaii)

In South Kohala specifically, the # of single-family home sales is also down, 52 percent YoY, but the median sales price is up by a striking 12.5 percent YoY. Condominium sales in South Kohala, on the other hand— while also down a substantial 48 percent YoY in units sold— is down 4.8 percent YoY in median sales price. (Source: One Republic Title)

In Mauna Lani Resort, there are a total of 17 condos and single-family homes available for sale, up 310 percent from the average of 5.5 properties for sale within the resort just one year ago. The 17 properties have been on the market for a combined average of 88 days (“Days on Market” or “DOM”) compared to the 11 properties that have sold within resort in the last three months, with an average of 58 DOM. Of the properties to sell within the last three months, 36 percent had multiple price drops before finally going into contract. There are currently nine condos and five homes under contract in Mauna Lani Resort.

In the Luala’i neighborhood in Waimea, there is currently only one 4 Bed, 2.5 Bath home on the market for $1,050,000. Lack of inventory has been Lualai’s biggest factor in driving up prices in the neighborhood. In the beginning of January, an original-condition (no upgrades) 3 Bed, 2 Bath, 1454 SqFt home sold in the neighborhood for $1,160,000 in 5 days for 100% of the list price. (It was the first home to sell in the neighborhood since November 2022.) Prior, the most expensive 3 Bed, 2 Bath, 1454 SqFt home to sell in the neighborhood was in August 2022 for $900,000. There are currently two other 3/2 homes in the neighborhood under contract with list prices of $995k and $943k.

What does this all mean? As I have been telling my active Buyers, the real estate market on the Big Island is vastly different from area to area and, in some cases, even neighborhood to neighborhood right now.

Is it a bad time to buy? On the contrary. Reason 1: With multiple price drops happening and properties taking longer to sell– in many areas, but certainly not all– Buyers are often able to submit bolder (which some might call “lowball”) offers, and more often than not, Sellers are entertaining, negotiating and even accepting them. Cash Buyers– who are able to take advantage of prices drops/increasing inventory and are not reliant on today’s mortgage rates– hold the power in today’s real estate market. Reason 2: Those who took advantage of historically-low mortgages rates during COVID (before prices started spiraling out of control) got great deals on properties. But while those 3-4 percent rates were half then what they are today, they were, historically speaking, not normal. (In fact, it was the first time we’d seen rates that low in history.) Additionally, while mortgage rates during COVID had been at their lowest ever, there was also double the buyer frenzy. With that buyer frenzy mostly gone (again, in most cases but certainly not all) Buyers, who are able to take advantage of price drops and get their “bolder” offers accepted, aren’t seeing that much of a difference in overall cost– even when financing their purchases– had they bought two years ago. Regardless, the decision to buy a property or not should not ultimately come down to the mortgage rate. As I often tell my Buyers, purchase the property because you love it and can afford it– you can always refinance if/when rates go down. 

Is it a bad time to sell? While many price drops are happening in many areas across the Big Island, properties are still commanding nearly the same prices they were a year ago, if not more. So no– it is not a bad time to sell, either. But, a word of advice if you do choose to sell right now: Patience. With mortgage rates increasing again and inventory (in many areas) opening up, we understand that, as far as supply and demand goes, the former is increasing while the latter is decreasing. Thus, properties are, naturally, taking longer to sell. 

Uncertainty in the economy inevitably equates to uncertainty in the real estate market. The constant fluctuations we are seeing in supply and demand– and consequently, in prices, rates and sales– makes the economic outlook that much murkier. Staying up to date on the market, month to month, is key to keeping a pulse on it.

Posted by Nalani Cayme

February 23, 2023

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