Kauaiâ€™s real estate market experienced a drastic sales surge in February 2011, propelled by a dramatic upswing in condominium sales and a considerable increase in single-family homes as well.
The Garden Island saw a total of twenty-one condominium purchases in the most recent tracking period, representing a sharp increase over the twelve condo sales recorded in February 2010. Although these numbers may seem somewhat low in absolute terms, the percentage change in condominium sales year-over-year was about seventy-five percent.
However, this uptick in sales volume was accompanied by a substantial decline in median sales price. Specifically, the median price in February 2011 dropped more than sixty percent compared to year-ago levels. February 2010 saw a median condominium price of $370,000, whereas the most recent numbers put that figure around $144,500.
Granted, Kauai has an extremely small quantity of condo sales compared to Oahu or Hawaii in general, meaning that a few aberrations in property mix could explain a drastic shift in median price. This may have in fact been the case in February 2011, when eleven condominiums were foreclosed upon for an extremely low median price of $65,000. Relative to last year, when there were only four condo foreclosures on Kauai with a median price of $137,500, this represents a substantial change.
On the flip side of the Kauai housing market, there were both more home sales and higher median prices in the month of February. Across the Garden island, there were twenty-six single-family home sales, marking a twenty-four percent increase over the twenty-one houses purchased in February of 2010. Unlike condominiums, however, homes saw a sharp uptick in median price alongside the increase in sales volume. From February 2010 to February 2011, the median price rose from $446,500 to $545,000.
Though the Kauai real estate market is likely to pass through a series of cyclical changes throughout the next several years, the Garden Islandâ€™s housing market will likely demand additional properties long-term, as the population of the neighbor islands substantially outpaced the island of Oahu. If investments from external actors increase alongside organic population growth, then demand for condominiums and single-family houses will both eventually increase.
Unfortunately, the Kauai housing market, along with much of the rest of Hawaiiâ€™s real estate market, continued to be heavily influenced by foreclosures and distressed properties. Compared to the entirety of 2009, there were approximately eleven percent more foreclosures throughout the state during 2010. Overall, this amounted to 1,670 foreclosures throughout the fiscal year â€“ more than three times the quantity recorded in 2008. This fact highlights one of the unique aspects of the Hawaii real estate market, which saw an increase in distressed properties substantially later than many comparable markets in the continental United States.
Foreclosures tend to depress the median price in the market, although the discount rate for foreclosures was substantially lower in Hawaii compared to the rest of the nation. Specifically, the median foreclosure for the Aloha State was sold for $380,661Â â€“ approximately fourteen percent below the average sales price for the state. For the United States in general, the discount rate was nearly thirty percent. Kauaiâ€™s housing market is not likely to see any immediate help from foreclosure rates in the near future, as the size of the labor force decreased even as unemployment increases.
On the bright side, Hawaiiâ€™s unemployment rate remained substantially below the rest of the United States. Kauai in particular saw a fairly high unemployment rate, clocking in at eight and a half percent. For comparison, Oahu registered a foreclosure rate of less than five and a half percent, while the Big Island saw a rate of more than nine percent. Maui saw an unemployment rate of just less than eight percent, although one of the subsets of the figure, the island of Molokai, had an unemployment rate of twelve percent.
The commercial sector of the Kauai real estate market may also be experiencing a nascent recovery, although commercial and industrial properties tend to lag several months behind residential properties. Commercial real estate is looking positive specifically because commercial property in the Hawaiian islands was not devastated by the market crash, with the possible exception of self-storage facilities.