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Big Island real estate update
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The Big Island or Hawaii Island real estate market saw a substantial uptick in the quantity of homes sold and condominiums purchased. In February 2011, there were a total of 111 single-family homes purchased, representing a twelve percent increase from February 2010, when 99 single-family properties were purchased.
Interestingly, the increase in sales volume in February was accompanied by a spike in the median price. This may indicate some considerable strength in the housing market because a rise in sales volume is generally accompanied by a fall in the median price.
Essentially, the cheaper a property, the more likely the average consumer is to purchase it, while the higher the property’s price, the less likely an individual is to place an offer.
In February 2011, the average single family home on the Big Island cost $256,400, which represented an increase of about eight percent from $237,000 in February 2010. A considerable amount of the Big Island’s single-family home market was driven by North Kona, which saw just less than three dozen home sales over the period – an uptick of fourteen sales from the same time last year. For these select properties, the average sales price was $430,000, up from $417,000 in February 2010. There were also a considerable number of home sales in Puna, which is generally a lower income region of the Hawaii Island housing market.
Condominium sales increased even more strongly than home sales, although condos did see some weakness in terms of median price over the last tracking period. There were 33 percent more condo sales in February 2011 compared to February 2010, representing an increase from 39 in 2010 to 52 in 2011. The median price declined by seven percent year-over-year, from $266,175 to $247,500. The condominium sector of the Big Island’s housing market was largely driven by the South Kohala and North Kona regions. In North Kona, there were 23 condominium sales during February, while in South Kohala there were 27 condo sales.
South Kohala’s figures were especially impressive, since there were only 11 home sales in the region during February 2010. North Kona condominiums generally sold for less than the median price, while South Kohala tended to have more expensive condos.
The Big Island housing market continues to be heavily affected by distressed properties, short sales, and foreclosures. Although the foreclosure rate for the state as a whole declined by two percent year- over-year, Hawaii Island maintained a foreclosure rate considerably higher than any other island. Having the highest proportion of foreclosures in Hawaii is especially disconcerting, because Hawaii already has one of the twelve highest rates of foreclosure in the entire country – a trend which has held true for several months straight.
The Big Island had a foreclosure filing rate of one for every 270 households, which works out to approximately 299 foreclosure filings for the entirety of the City and County. While this is lower than particularly weak markets such as Arizona and Nevada, it is considerably less than the rate on Maui, Kauai, and Oahu.
Whatever nascent strength the Hawaii Island housing market may be showing is being challenged by the highest unemployment rates in the state. Although the statewide unemployment rate is considerably below the national average, the Big Island has an unemployment rate of 9.3 percent, compared to Kauai at 8.5 percent, Maui at 7.9 percent, and Oahu at 5.4 percent. Additionally, the size of the state’s labor force shrank in the most recent tracking period, compounding the problem of preexisting issues with unemployment. In the long term, however, it seems that there will be an increased demand for housing on the Big Island, since the Outer Islands are experiencing a faster pace of population growth than the main city of Honolulu.
Additionally, although the Big Island does not have as many commercial properties as the urban center of Oahu, the commercial sector of the market should benefit from increasing commercial investment. Taken as a whole, the state of Hawaii saw fully twice as many commercial property sales (such as shopping centers, office space, and hotels) sold in 2011 compared to the previous year.
