Kauai Current Market Conditions
“Island Wide” the number of residential home sales in August were up 48% over August 2012, fueled by a whopping increase of 117% on the North Shore ! Unfortunately sales were still up only 14.34% “year over year”, again following the roller coaster ride that has become the new standard during this recovery. Momentum – slow down, momentum – slow down, and so on and so on.
Same trend with Sales Volume, Island wide up 83.42% for August, but only 11% for the year. Would you believe up 122% for the North Shore for August, but down (-20%) for the year, yikes ! Normally with this kind of dramatic shift in momentum we would be able to say we are “on our way”, but “once bitten twice shy”, as we have seen these shifts several times over the last two years, so I am not yet ready to declare that things will be on a consistently smooth upward trajectory from here on.
Median sales price, which I have mentioned in the past is the most inconsistent/unreliable of the
real estate statistics because of the small size of the Island was up nearly 20% (year over year) with a gain of 49% for August. Focusing on just the Hanalei/Princeville area, the median sales price was up a meager 1.56% in August and down (-8.75%) for the year.
Inventory levels are way down from 2012 levels, which would normally indicate screaming increases in prices on a consistent basis, so my only conclusion is that this is just a very prolonged “bumpy” recovery, the likes of which we have never seen in our lifetimes, to the worst housing crisis ever.
Continuing good news is that the “Distressed” Properties: Short Sales, Foreclosures, ect., which have been an anchor on home prices nationwide for several years now are almost completely gone from Kauai and when these types of listings do show up, multiple offers is now the norm.
Interest rates have spiked recently, a fact that I have been continually warning about as far as it pertains to the “real” cost of real estate ownership. Believe me when I tell you it is an extremely substantial factor to consider for short term carrying costs and an even more important cost over the life of the loan and in my opinion is the biggest risk, along with higher home prices, for those buyers who wait until they think the water is “safe”.
One last trend worth mentioning is the so-called “Renter’s Nation”. Several of the pundits have coined this phrase to describe what is happening nationally to so many families who would normally be buyers, but for a number of reasons (including strict mortgage lending guidelines, having hurt their credit during the financial crisis, fear of another housing slump, ect.) have decided to rent/lease instead and this is causing a shortage of rental property inventory, which in turn is causing higher rents. There seems to be no end in sight for this cycle and it has had a very dramatic effect on “long term” rental rates and availability even on Kauai (the home of the vacation rental), so if you were ever considering “investment property” without the hassle of managing a vacation rental, this may be the best time in several generations to acquire this type of asset (the big dogs are buying blocks of houses on the mainland).