Kauai Real Estate >

Realtor News

Current Market Conditions on Kauai

Kauai Current Market Conditions
April 2012

Contradictory results for March have added to the general confusion as to when and how strong the recovery in Real Estate on Kauai may be this year.

While the number of residential sales for the entire Island, the normal driver of Real Estate trends, showed a slowing in March (down 11.43%), it still is up $5.5% year to date, which is not blazing, but a respectable start for the first quarter. However the North Shore sales, which have been really active the last 18 months, was down -30.77% for March and flat year to date.

Island wide residential Sales volume increased 10.29% in March, but only 2.73% for the North Shore and is off a rather disturbing -24.96% year to date for the North Shore and -14.99% Island wide. Bumps along the way are rather common during a recovery, but we have had more than our share over the last two years.

The bi-polar part of the statistics is that the Median Sales Prices “Island Wide” improved 19.32% last month and 10.25% on the North Shore, which helped the North Shore gain 28.28% in Median Price year to date. So this is somewhat polar opposite from the last 18 months, where number of sales and sales volume were steadily increasing but Median Sales Prices were flat. What does this mean, probably only that for March, there were few sales but at higher prices than the last year or two, we will have to wait and see if number of sales picks back up over the next few months which would be back to the healthy recovery mode we have seen recently.

The “distressed” categories: Short Sales, Foreclosures, ect., still continue to hold down the progress of more normal “non-distressed” sales on an Island wide basis, but the North Shore seems to be close to putting this drag behind them.
I feel the long term potential going forward is still very compelling, but my crystal ball still won’t give me any certainty as to when the current “flatness” will end and the world of appreciation will begin. However, keep in mind that historically, real estate prices rise faster than they fall and with the low interest rate environment we are currently in we may well in be the buying opportunity of a lifetime and we just can’t see it yet.

Even thou the Feds continue to say interest rates will most likely not increase substantially for the next two years, they have shown in the past that they really don’t control markets, the value of the dollar, ect., that affect rates, so I would be remiss if I didn’t reiterate the overall risk of possible rising Interest rates as it pertains to the cost of property: it is important to consider the savings that come with low interest rates, particularly over the life of the loan, or even the partial life of the loan. So even with all the indicators suggesting the overall market has not completely stabilized, or rising as consistently as we would like, the buyers who wait will most likely face higher interest rates as well as higher home prices.