We’re a little over halfway through 2017 and our real estate market in Kauai continues to be strong. We’ve recovered significantly from the market crash and for the last five years we’ve had appreciation of about 10% per year in the condo market and 6.5% per year in the single-family home market. Economists are saying that over the next few years, we can expect appreciation to drop a bit to 4% or 5%.
I want to take a few minutes to explain a little bit more about our market in greater detail. There are some underlying dynamics in our market that are creating these conditions. First, let’s talk about demand. Anything under $600,000 is in heavy demand from buyers. We have first-time buyers, folks in the mainland looking to retire, investment buyers, and more. We simply don’t have enough inventory for these people. This is creating a situation where prices are continuing to rise at a rapid rate.
If you’re looking to buy a home, you’ll need to be prepared to act quickly. There are a little less than 800 total properties on the market right now. If you’re looking in the luxury market between $1 million and $3 million, you have a few more options and can expect a 4% to 6% discount on the list price.
I’ve got some historical data to share with you, courtesy of Paul Brubaker. Paul was the Chief Economist for the Bank of Hawaii for 12 years and has been tracking market appreciation. He’s provided a few graphs for us that you can see in the video above. Back in 2000, things were much more affordable. When we get to the peak of the bubble in 2006 and 2007, you can see the market correction and subsequent recovery, which brings us to today.
As you know, our island is divided into five different sections: Lihue, Koloa, Waimea, Hanalei, and Kapaa. Today, we want to talk about Kapaa in particular. This is an area where we have the most demand for homes priced under $600,000. Sales have definitely gone up, but the median price has gone down. What’s going on here? The key word here is median. Even though the median price has gone down, it doesn’t mean prices have gone down overall. It just means that the demand for homes in lower price points is far outpacing the demand in the higher ranges. This results in a lower median price, but sale prices are up across the board.
I hope this gives you an idea of what’s going on in the market. If you have any questions for us, don’t hesitate to give us a call or send us an email. We look forward to hearing from you.