I hope this market update finds you safe and healthy. Here in Kauai, it’s been about a month since we’ve had any new coronavirus cases. Hopefully, this trend will open up the island to tourism on October 1 and accelerate the real estate market!
Ever since the pandemic shutdown began about six months ago, our market has stayed stable. At 0:47 in the video, you can see that sales dropped in May and June, but things rebounded in July, and we ended August with 46 sales. As of the recording of this video, we’ve seen 22 single-family homes close during September. A year ago, we saw 24 closings during the same time frame, so it’s clear the market is regaining momentum.
Like the market in general, prices have stayed stable too (except for some vacation rentals). At 1:38 in the video, you can see that the median sale price of single-family homes has risen almost $100,000 compared to August 2019, which is a reflection of more expensive homes selling—particularly on the north and south shores. The volume of sales for single-family homes has also risen compared to August 2019, but the volume for condos has dropped, and the volume for vacant land has stayed relatively the same.
Since real estate pricing is based on supply and demand, there will likely be downward pricing pressure for condominium projects that saw a significant rise in inventory with limited demand.
For example, back in March, there were just three active listings for the condotel project known as Ashton Islander on the Beach on the east side, but now there are 16. Just one of those has gone under contract in the last six months, and none have sold. Prices are commensurate with previous vacation rental income, so we know that these prices will need to adjust. These income properties won’t be producing what they did last year, and neither will they in the near future.
Down the coast at the Kauai Beach Resort, another popular condotel with 35 units, there are 16 available units, and prices have started sliding downward. There were a number of sales in the last six months, but since they were all from one investor, that’s an exception to the rule. We see sales in the condo market for people who are coming to live here or don’t need to rent, but for the segment of buyers who are thinking about income to offset the cost of their vacation rental, the situation is different because it’s unknown how quickly tourism will recover.
In any case, it’s a great time to sell if you can price your property correctly. If you need help pricing your property, my team and I would be happy to provide you a price analysis. If you’re a buyer, the good news is that interest rates are still low. As I said, Kauai has regained some momentum because mainland buyers (primarily from California) want to move to more rural areas. We’ve had a number of transactions in the multi-million dollar market due to this trend.
If you have questions about our Kauai market or are thinking of buying or selling a home soon, don’t hesitate to email me. A hui hou!