Hawaii Island’s real estate market took a bit of a pause this summer, real estate agents say.
But overall, the West Hawaii market continues to grow, with the median residential sale price still increasing about 1 percent a month, said Michael Griggs, who keeps detailed real estate statistics for Big Island sales.
“For this phase of the cycle, which is a pretty early one, we’re right on track,” Griggs said.
Gretchen Osgood, who also provides monthly real estate reports, attributed the pause — she described it as the market taking a breath — partly to those increasing prices.
“The market is going to be just fine,” she said, noting that while the pending home sales in July were lower this year than last year, overall sales, including land, were slightly higher. “We just have to get past the summer doldrums.”
At the end of July, only seven houses were listed at less than $400,000, a record low. Last year, 23 properties were in that price range.
“We fulfilled a whole bunch of potential demand” with some of the increased sales in the last year or so, Osgood said. “We need to wait for new buyers.”
A bright spot has been the growing interest by developers and banks in open land that could be built on, Griggs said.
That interest indicates they “recognize a shortage of inventory,” he said. “When you have this type of development activity, your overall economy starts to take off.”
Statistics showed the number of land purchases had dropped some since last year, but the median land price was up 27 percent.
Osgood noted that cash sales are still a driving force for the West Hawaii real estate market, with cash accounting for more than half of sales. That may be mostly because of older buyers with more liquidity, Osgood said, and may also be a sign of how difficult it can be for people, especially local families, to qualify for a loan. The Federal Housing Administration now requires mortgage insurance for the life of its loans. That alone can add $100 a month to a mortgage payment. Families that are being priced out of the single-family homes in West Hawaii then look to condos, Osgood said.
Condo association fees can run several hundred dollars a month, which leaves those buyers with as much as $100,000 less in buying power. That’s having an impact on the condo market, she said.
“It’s kind of scaring buyers because you buy a monthly payment,” she said.
Where does the market go next?
“From everything I read, we do run fairly close to national trends,” he said, adding that Kona had an inventory decline of 66 percent since the peak, following closely a 69 percent decline in San Francisco since the market peaked there. “Things will be stronger as we head into the end of the year. We do have to muddle along a little bit.”
Looking at foreclosures, he said California is almost back to normal, while Hawaii County’s numbers have dropped, but not returned to pre-recession levels just yet.
“Our judicial foreclosure process is very slow,” Griggs said. “We’re probably going to see this stuff in the pipeline for a while.”
More “normal” numbers of foreclosures may return in another year, he added.