Click image to view the full Hawai'i Association of REALTORS® Statewide Housing Data 2011 report

At the end of December, Linda West of our Waimea office provided us with a recap of North Hilo real estate sales for 2011. A few of our agents from around the island are working on similar updates for the Big Island markets where they live and work. As we wait for their reports to come in, those interested in a statewide perspective on Hawaii’s real estate market may find this report (published recently by the Hawai’i Association of REALTORS®) useful. The report includes statistics for Hawaii as well as a breakdown of single-family home and condo sales for Hawaii Island, Kauai, Maui and Oahu. You can also view monthly data on the Title Guaranty website — click here to view December 2011 data.

Residential Sales in North Kona

Search North Kona homes for sale | Search North Kona land for sale

Single-family home sales in North Kona have increased by 12% over the past 12 months. The total number of closed escrows for North Kona homes priced under $4M from November 2010 to November 2011 was 431, a great improvement from the low of 204 homes sold in 12 month period from May 2008 to May 2009. The improved demand and decline in inventory appears to have caused median home prices to level off in the $369,000 – $370,000 range since August.

Condo Sales in North Kona

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Condo sales in North Kona have increased by 6% over the past 12 months. The total number of closed escrows for North Kona condos priced under $1.5M from November 2010 to November 2011 was 320. This is a great improvement from the low of 143 condos sold in 12 month period September 2008 to September 2009. The improved demand and decline in inventory appears to have caused median condo prices to level off in the $167,000 – $168,000 range since August.

Trend to Watch: Pending Ratio – North Kona Condos

One of the indicators used in the Griggs Report to track the strength of the North Kona real estate market is the Pending Ratio (see below). The North Kona condo Pending Ratio has been steadily improving since August, a clear trend based on a decrease in inventory and increase in escrow activity. The Pending Ratio for North Kona condos has risen 38% from a year ago.

Pending Ratio is the ratio of listings in escrow (pending sales) compared to the number active listing/lots for sale multiplied by 100. The Pending Ratio can be used as measure of the demand versus supply dynamic in the market place. The higher the ratio the stronger the demand versus supply balance. Eventually, this will reach the point where prices rise again.

For more information about Big Island real estate trends or available listings in West Hawaii, please contact me via email or by phone at 808.936.8134.

-- Hawaii house prices and U.S. and Japanese net worth -- Click to view full article and additional charts from FRBSF

In the December 19, 2011 edition of the Federal Reserve Bank of San Francisco’s Economic Letters, FRBSF senior economist John Krainer and professor of economics and finance James A. Wilcox use the Hawaii real estate market to examine whether “demand from specific identifiable groups of buyers better explains house prices in a large, but circumscribed market.”

Their research explores the relationship between economic conditions in Japan and the United States and the number of homes purchased by Japanese and U.S. mainland residents. The report includes an interesting look at housing price movement compared to visitors to Hawaii during the time periods under consideration. Click here to read the full report.

Note: months’ supply is determined by dividing the number of homes or condos sold in a month by the total current number of active listings.

Residential Inventory — North Kona

The chart above shows North Kona’s residential median price leveling off as the number of months’ supply of homes continues to decline in this West Hawaii district. The residential median price has been fairly stable for the past 3 months. For homes priced up to $4M, supply is 8 months. For the price range up to $500,000, supply is less than 4 1/2 months. According to the NAR, the national average in October was 8.5 months. In North Kona, the current inventory level is down 46% from peak levels of early 2009.

Price decline has clearly driven the shrinkage in supply in the North Kona residential market. For reference, a 6-month supply level is widely considered the point of stable prices and an under-3 month supply is the level that causes price increase. There are currently only 262 North Kona homes listed for sale under $4M.

Condo Inventory — North Kona

The North Kona condo inventory is really the story in this report. The condo inventory is down 59% from peak levels of early 2007. The inventory in the price range to $1.5M is down to 180 units (a 7-month supply). In the price range up to $500,000 the supply is at 6 months. There are currently 214 condos for sale in North Kona (including “detached condominiums” in the resort areas). The number of pending sales is the same as last year but inventory is down 16%. The North Kona condo median price continues to show very slight decline.

For more information about trends in other areas of the Big Island, download the full report by clicking the link at the top of this post. Or, please email me to be added to the Griggs Report monthly mailing list.

Big Island Real Estate Market Trends Summary – September 2011

Year-over-year improvement in market demand versus supply is apparent in all categories — homes, condos and land — with the exception of a slight fallback in Kona’s under-$400K residential market (see summary below Table 6 at the top of page 3 in the full report).

Single-family residential, condo and land sales are up year-over-year while inventory continues to decline. Land is now showing the biggest increase in sales. It is nice to see land back on the radar screen. The following chart outlines land sales trends in North Kona.

North Kona Land Sales Trends:  September 2002 – 2011

North Kona September land sales 2002-2011. Adapted from The Griggs Report, September 2011.

The Kona land sales numbers above are the number of lots priced at $1.50M and below that sold in a 12 month period as of the report date. Sales hit a low in September 2009. Last year, that number moved into the 50s and currently we have 73 sales for 2011. From a buyer’s perspective, land prices coupled with decreased construction costs are now becoming competitive with what is available in newer residential construction.

Seasonal Shifts in Pending Ratio

Michael B. Griggs R

On the bottom of page 2 of the full report there is a chart showing the Pending Ratio trend for the Big Island.

The Pending Ratio is the ratio of listings in escrow (pending sales) compared to the number active listing/lots for sale multiplied by 100. The Pending Ratio can be used as measure of the demand versus supply dynamic in the market place. The higher the ratio the stronger the demand versus supply balance. Eventually, this will reach the point where prices rise again.

An example using the Kona land market data:

In 2009, there were 12 escrows and 285 lots for sale (Pending Ratio= 4.21). Currently, we have 12 lots in escrow and the inventory is down to 172 active land listings (Pending Ratio= 6.98). This is still a market with quite an oversupply, but it is changing. So far, the data has consistently shown this gradual improving market trend.

In July, a very distinct change began between the indicated market strength on the West side of the Big Island (increasing ratio) compared to a mirror image showing decline on the East side. This is due, in part, to a normal seasonal slowdown on the East side. The effects of tighter financing and appraisal rules as well as continued stresses on the East Hawaii job market are likely also contributing factors.

Please email me to be added to the Griggs Report monthly mailing list.

Near Ninole on the Big Island of Hawaii's Hamakua Coast

Wes Davidson, R(S)

The Hamakua Coast of Hawaii’s Big Island offers some of the most fertile land and beautiful views on the entire island. Hamakua is the “Green Coast,” where plant life thrives and waterfalls abound. Parcels of over five acres are readily available for home construction, agricultural use (planting or pastureland), or simply for investment in what may be the next “hot area” in the islands as a cadre of baby boomers begin to retire and look for more favorable climates in which to live.

If your Big Island real estate search brings you to Hawaii’s Hamakua Coast, I can help you find the parcel of land that meets your criteria and assist you through the entire purchase process. Please contact me if you would like a complete listing of all available sites along the Hamakua Coast or let me know how I can be of help with your property search.

New Hamakua Coast Listings (from 6/1/2011)

New listings of undeveloped land for sale above five acres in size:

Hamakua Coast Price Changes (from 6/1/2011)

Price reductions for undeveloped land above five acres:

Hamakua Coast Sold Properties (from 6/1/2011)

Sold listings of undeveloped land above five acres: 

Frank Goodale, R, CRB

On July 20, 2011, the following was posted on Realtor.org:

June Existing-Home Sales Slip on Contract Cancellations, but Prices Stabilize

Existing-home sales eased in June as contract cancellations spiked unexpectedly, although prices were up slightly, according to the National Association of Realtors®. 

Sales gains in the Midwest and South were offset by declines in the Northeast and West. Single-family home sales were stable while the condo sector weakened.

On July 28, this article was posted on the Wall Street Journal’s Developments blog :

Behind the Numbers: Pending Home Sales Rise

This week’s reports on the housing market have been decidedly mixed.

On Tuesday, the government said new home sales were down 1% on a monthly basis in June. Also that day, the S&P/Case-Shiller index of home prices in 20 major U.S. cities was down 4.5% in May from a year earlier.

But today’s news was positive and unexpected: The National Association of Realtors’ seasonally adjusted index for pending sales of existing homes rose 2.4% on a monthly basis to a reading of 90.9 in June. Economists had forecast a 2% drop.

A Closer Look at A Complex Data Set

On July 22, 2010 the National Association of Realtors reported that existing home sales for the month of June (on a same month comparison with 2009) rose 9.8%.  In that report, it was noted that the First Time Home Buyer Tax Credit had produced “uncharacteristic but understandable swings as buyers responded to the tax credit.” NAR’s Lawrence Yun went on to note that he expected the impact from the tax credit to continue for an additional two months.

One year later, we are measuring our current environment against these “uncharacteristic but understandable swings.” However, it is common for an artificially induced distortion in the marketplace to set off a wave of activity that first rises above the average and then receeds below the average. Statistical waves — just like ocean waves — do not just disappear. They nearly always reappear (and quite often one year later). A nearly identical scenario was repeated with the car rebates. Most economists understand this but occasionally it gets overlooked in the news. Reporters who do their job well understand that it is instructive to factor into their commentary this predictable behavior of markets.

That being said, the numbers published in the recent reports mentioned in the articles above do raise legitimate questions about any predictions based on an artificially induced stimulus and may explain the more recent pessimism in the marketplace. Yet, on the optimistic side, we are once again likely close to the bottom of the current real estate wave which, as those of us who live in Hawaii know, is a great place to set yourself up for the next one coming in.

Kulalani #406 – MLS 244145 – Tuesday (6/28), Wednesday (6/29), Thursday (6/30) from 1 pm to 5 pm
Ka Milo #125 – MLS 246268 – Thursday (6/30), Friday (7/1), Saturday (7/2) from 10 am to 5 pm

Three new residences are currently under construction in Ka Milo at Mauna Lani Resort

If you drive around the Mauna Lani Resort on the Big Island’s Kohala Coast these days you can see evidence of an increase in the pace of recent and current new construction, especially in newest subdivisions including Ka Milo and Kulalani.

Kulalani

Kulalani seems quiet now that they have successfully finished their first phase of construction. Nevertheless, plans are brewing to break ground on the new phase of multi-plex condo toward the end of this year. For those interested in resort-style living on Mauna Lani’s North Course, one townhome is currently on the market in Kulalani. Recently listed, MLS 244145 is turnkey furnished and has an excellent golf course view.

Ka Milo at Mauna Lani

Rachel T Mohammadi, R(S)

In Ka Milo, three homes are under construction on the golf course. The first to be complete will be ready by September and the others by next Spring (the developer currently has two of these units listed for sale in the MLS – see MLS 244318 and MLS 241420 for photos and details).

There are currently two completed homes for sale in Ka Milo. One is a “paired” home located on Mauna Lani’s North Course: MLS 246268 is a well-appointed new listing that offers a sense of privacy. The other available listing is MLS 242401, an elegant single standing home with ocean views. Both homes offer all the benefits of resort ownership, including Mauna Lani’s Advantage Program.

If I can answer questions about any of these or other Kohala Coast resort listings for you, please contact me for more information.

This map shows where $1M+ homes have sold in 2011 in North & South Kona, North & South Kohala and the Hamakua Coast

View all Hawaii Island $1M+ homes currently listed for sale

On Friday, June 17, the 40th sale of a single-family Big Island home priced over $1M was reported in the MLS.

The property that closed escrow last week, which sold for $1,525,000, is located in Moani Heights at the Uplands at Mauna Kea Resort. Just two days earlier, two other luxury homes sold in North Hawaii, one in the Heathers at Kohala Ranch (sold for $1,300,000) and the other just off Kawaihae Road on Pako Place in Waimea (sold for $1,195,000).

The most expensive single-family home sold so far this year on the Big Island closed escrow in February. That property, located in prestigious Hualalai Resort, is a 5,614 sq ft luxury home which sold for $16,950,000.

Determining what type of mortgage loan program will work best for you is a decision that will require careful investigation and an honest analysis of your financial situation. Your Realtor® and your lender will provide helpful information about the various types of loan programs available.

Keep in mind that if family assistance is an option, there are advantages to working with “the lender of first resort,” but if you are seeking traditional financing, here are two questions you should be prepared to answer as you start the process:

1.  How much money have you saved to use as a down payment?

There are loan programs that will allow you to purchase a home with little or no money down, but the total cost of these loans will be greater over time because you will be required to pay Private Mortgage Insurance (PMI). You can avoid paying PMI if you are able to save enough money to have a 20% down payment.

A 20% down payment may seem like a daunting prospect for many buyers entering the market for the first time, especially in Hawaii, but that doesn’t mean that there aren’t options. For those who can save 3.5% of the purchase price, FHA loans are available, making home ownership an attainable goal. There are also USDA Rural Housing loans available for Big Island buyers as well as other loan products that your lender may be able to make available to you.

2. How long are you planning to stay in the home you are purchasing?

Answering this question prepares you for two decisions points.

Is an ARM an option? Although Adjustable Rate Mortgages (ARMs) have received a lot of negative attention over the last few years, there are scenarios where alternatives to a traditional 30-year fixed rate mortgage may make sense for a buyer. Most Adjustable Rate Mortgages have a fixed rate for the first few years. For buyers who know that they will sell a home before the interest rate resets, an ARM can make financial sense, however, thorough research should be done before choosing to use an ARM.

Should I “buy down” my interest rate? The other decision buyer will face during the loan process is whether they should spend money up front to “buy down” their interest rate to a lower rate. This decision requires careful calculation. If you spend the money up front, you will need to stay in your home long enough to recoup the expense by saving money on your monthly mortgage payment over time. Ask your Realtor® or your lender to work through the math with you to determine if paying up front for a lower rate makes sense for your personal situation.

Definitions

Fixed Rate Mortgage: Fixed-rate mortgages are the most stable and predictable type of mortgage. In most cases, your monthly payment is the same over the life of your loan and your interest rate will not change. Typically, first-time home buyers opt for a 30-year fixed rate mortgage, but 15 and 20-year mortgages are also available.

Adjustable Rate Mortgage: ARMs are mortgages that generally start with a lower interest rate and lower monthly payment than a fixed-rate mortgate, but the interest rate and payment amount will change at specific intervals over the course of the loan. There is a whole vocabulary specific to ARMs (e.g. reset, index, cap, ceiling, floor, hybrid) and you should explore the terms of the loan program carefully before deciding to opt for an adjustable rate.

Private Mortgage Insurance (PMI): PMI is extra insurance that protects the lender against loss in the event that a buyer defaults on their loan. PMI is required by lenders when the borrower is financing 80% or more of the value of the home they are purchasing. By law, PMI is terminated once the borrower has paid down the loan to a balance equal to 78% of the value of the home at the time the mortgage was obtained if the borrower is in good standing with the lender.