October 11, 2018||Mortgages/Economy/Market

Trend Watch: Q3 2018 Hawaii Island Market Report

The following Big Island real estate market overview is compiled from MLS data for transactions that closed escrow during July, August and September of 2018. Pictured above: the golf course view from MLS 612196, a condo in Halii Kai at Waikoloa Beach Resort, sold by Cindy Whittemore and Gerry Rott in August. 

Kilauea Update: Lava Retreats & Blue Skies Return

In May of this year, Kilauea Volcano began erupting in the lower east rift zone in the Puna district of Hawaii Island. More than 700 homes in the path of the flow were eventually lost and the landscape of the surrounding area was forever altered. While only a small area of the island, relatively speaking, was directly impacted by the 2018 lava flow, most of the island, at some point, was impacted by smoke, ash, volcanic emissions (VOG) and the economic impact of the sensational media coverage about the event. In August, however, it all stopped and, for the first time since 1986, there has been no surface activity from Kilauea for more than 30 days. The island has been experiencing consistently clear blue skies and a level of air quality rarely seen since the 1970’s.

This is excellent news for residents and visitors alike and we are especially thrilled that our annual Ironman visitors are enjoying these gorgeous conditions too.

The question at hand, then, is how have these new developments affected the real estate market?

Big Island Residential Sales—Q3 2018

District Map with Median Prices Q3 2018

The answer to that question isn’t as straightforward as we might hope. Historically, the third quarter of the year is when we see a seasonal drop in activity, most notably in West Hawaii, before what is traditionally a significant uptick in the new year. Additionally, for 2018, Q3 real estate statistics are showing the effect of this summer’s visits from hurricanes Lane and Olivia and also are likely being impacted by the deceleration in the housing market happening nationally.

So, how do the numbers compare to the previous quarter?

Three East Hawaii districts saw modest increases in the number of sales in Q3, while the remaining Big Island districts experienced decreases in the number of transactions. This is a relatively normal cycle as noted above. The seasonal slowdown in sales is typically more prominent in Leeward districts. Of the districts showing sales increases, Puna had 209 total sales (+16), South Hilo 99 (+15) and North Hilo had 11 sales (+5). North Kona, with 99 total sales in the 3rd quarter of 2018, showed the greatest decline with 54 fewer transactions than in Q2 2018. There were 560 homes sold across the island in Q3.

On the Big Island, the median price has increased annually since 2011; however, the islandwide median price decreased in Q3 2018 to $355,000 from the Q2 median of $399,000. Year-to-date, the median islandwide residential price is $365,000. This is up $21,000 from the same period last year with 103 fewer sales. Only three of the nine island districts showed median price increases: South Hilo median price increased very slightly over Q2 and is now at $439,000, South Kohala increased to $582,500 and Kau had the biggest improvement over Q2, up to $200,000. The six island districts reflecting a decrease in median price in Q3 are Puna, which ends Q3 with a median sale price of $232,000, North Hilo ($440,000), Hamakua ($368,000), North Kohala ($525,000), North Kona ($638,000) and South Kona ($335,000).

Luxury Market Update

48 homes and condos closed escrow with sale prices over $1M across Hawaii Island in Q3, down from 88 $1M+ sales in Q2. This is also down from 2017, which saw an average of 71 residential properties sold per quarter for over $1M. Of the 48 $1M+ properties sold in Q3 2018, 42 closed on the west side of the island: three in North Kohala, 19 in South Kohala, 18 in North Kona, and two in South Kona. The remaining six closings were located in South Hilo.

Median price in this market dipped to $1,575,000 from $1,612,500 in Q2. As of this post, there are 266 active fee simple luxury listings across Hawaii Island, priced from $1,039,000 in Keauhou Estates in North Kona to $14,950,000 in Hualalai Resort in North Kona. All luxury listings on Hawaii Island can be viewed here.

Big Island Condominium Sales

The condo market on the Big Island primarily comprises three main areas—the population centers of Hilo (in the South Hilo district), Kona (North Kona district) and the Kohala Coast resort areas (South Kohala district).

As with single-family residential properties, condominium sales tend to decrease slightly in the third quarter of the year as most condos are located on the Leeward (West) side of Hawaii Island. Sales increased by six units in South Hilo while declining in South Kohala and North Kona. As of this post, there are 276 active fee simple condo listings located on Hawaii Island with a price variance of over $8M between the lowest and highest priced units. Overall, 55 fewer fee simple condo properties sold in Q3 than in Q2, with 80 (-41) in North Kona, 71 (-21) in South Kohala and 24 (+6) in South Hilo.

Island-wide, the median price of condos for Q3 2018 in the key condo markets fell to $318,000. The median price for condos sold dropped to $118,500 in Hilo, to $515,000 in South Kohala and to $311,500 in North Kona.

(<5 ACRES)

The Puna district led in sales of land parcels, as is always the case, but also had the most significant drop in sales with 209 closings in Q3 2018, down by 85 sales from Q2; however, median price did increase there by almost $7,250. (This is likely driven by buyers shifting focus from lower-priced parcels in higher risk lava zones to more expensive parcels in Lava Zone 3.) Across the island, there were 334 closings for land parcels in Q3 (down 161 from Q2). Only the districts of Hamakua and South Kohala saw very slight increases in the number of parcels sold

The median price for land parcels sold islandwide increased by $10,000 in Q3. The median sale price for residential parcels in Q3 2018 was $25,000 in Puna, $11,550 for Ka’u, $170,000 for South Hilo, $228,440 for South Kohala, $285,000 for North Kona and $110,000 for South Kona. There were too few sales in North Hilo, Hamakua or North Kohala for significant reporting.

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