The median price of a home on Kaua‘i broke the halfmillion-dollar mark for the first time last month, topping both Maui and O‘ahu. The average price of a single-family home jumped 40 percent, from $375,000 to $528,000 over this time
The median price of a home on Kaua‘i broke the halfmillion-dollar mark for the first time last month, topping both Maui and O‘ahu.
The average price of a single-family home jumped 40 percent, from $375,000 to $528,000 over this time last year, while the price of a condominium jumped from $347,500 to $420,000.
With the exception of the average price of commercial property, everything on Kaua‘i went up sharply last month:
• Residential – $375,000 to $528,000;
• Condominium – $347,500 to $420,000;
• Vacant land – $143,000 to $410,000;
• Commercial – $450,000 to $391,250;
Even agricutural or “vacant” land saw 187 percent jump, indicating that developers are paying premium rates for land that will later be developed for higher-end family homes or “second homes” for well-heeled buyers.
Meanwhile, experts here are warning that average home prices are not always the best statistic to determine “real” long-term value of Kaua‘i’s homes, because so few homes were sold here relative to other islands.
“If you had 10 homes sold at $10,000, and one sold for $40 million, then it throws the whole thing off,” said Keith Nitta, head of long-range planning in the county Planning Department.
Only 71 homes were sold on Kaua‘i in June, compared with 273 on the Big Island, and several hundred on O‘ahu. Prices in places like Hanalei, with medians of $830,000, drove June’s figures up here.
In other words, the low volume sold here skewed numbers to the point of being misleading, Nitta said.
Instead, factors such as land and inventory availability, zoning and permitting processes, and the number of investors willing to build here, are better determinates of long-term property values.
For example, Maui saw a May median home price of $617,000, thanks to the sale of a handful of million-dollar homes.
But Maui’s median snapped back to $500,000 last month. There are approximately 2,185 home units and lots coming on line within the next five years, Nitta said, and that increase in inventory, along with a slowing of the U.S. economy, could bring prices back from the stratosphere — or at least slow them down.
For example, a 1,500-home Kukui‘ula project in Po‘ipu is being developed by Alexander & Baldwin and Arizona-based DMB Associates. Those homes are expected to sell for as much as $500,000.
Other homes, particularly those homes built on ag or “open” zoned land, will go for much higher prices.
“What we’re seeing is really all about the marketplace,” Nitta said. “If you can sell it for a higher price, everyone’s going to do it. They’re only human.”
Some real estate experts here are saying that investors skittish of the stock market are making investments in Kaua‘i real estate, which for the next few years will remain high, but could see significant drop off as more homes come online.
Meanwhile, local real estate experts are warning people to not confuse Kauai’s latest rush of real estate “investors” with “speculators.”
“This is predominately a supply-and-demand issue, I think,” said Neal Norman, owner and principal broker of Koa Properties in Kilauea. “There are very few speculators here, and speculators don’t drive demand. Consumers drive demand. Most buyers are second-home buyers looking for a good investment.”
Norman said that most Kaua‘i home-buyers hold onto their homes for 10 to 15 years, and that even people looking to turn a relatively quick buck here will hang onto their property for a minimum of two years, so that they can get various homeowner tax breaks.
Even condominiums, the median price of which jumped are being held onto longer, and speculation is relatively limited in that sector, too, Norman suggested.
Along with the expected 2,185 new units, there are roughly 80 agricultural lots to be developed over the next five years, Nitta said, producing some 200 homes at prices anywhere from $850,000 to $1.2 million or more — or what some here call “moderately” priced homes for people looking for “country” living who are pulling down average annual salaries of $110,000.
But unless there is marked decline in lending rates, which stand at about 6 percent, demand will continue to make Kaua‘i homes the priciest in the state.
“People are trying to beat the clock and buy or sell now before the economy goes south,” Nitta said. “This peak that we’re in, you just put stuff out and it sells right away.”
Phil Hayworth, business editor, may be reached at 245-3681 (ext. 251) or phayworth@pulitzer.net
