The median home price on Kaua‘i for May was $665,000, according to data from Hawaii Information Service (HIS).
Karen Ono, executive director of the Kauai Board of Realtors, said this is the highest figure for any month ever on Kaua‘i that she can recall.
The figure represents a 43-percent increase from May, 2004, according to HIS multiple-listing-service (MLS) sales statistics.
For the year-to-date, the median cost of a residential home on Kaua‘i is $585,000, a 36-percent increase.
Ono said there were currently only two residential homes available for sale on Kaua‘i for under $400,000. The first, a two-bedroom home in Kalaheo, is listed at $350,000. Ono said it had been on the market for 215 days. The other offering, in Kapa‘a, listed at $295,000 and described as a “fixer-upper,” has been on the market for 524 days.
Terry Tolman, executive vice president of the Maui Board of Realtors, said the median price for a residential home on Maui in May was $780,000, to the best of his knowledge, also a record high.
“There’s no clear indication as to why. Part of it might be a lack of low-end supply,” he said.
Lihu‘e, at 64.7 percent, Waimea, at 54.2 percent, and Koloa at 53.1 percent, were the three districts that showed the greatest leaps in median sales price increases.
The number of total residential sales for May was 60, down one from May 2004, and down 2.7 percent for the year-to-date.
But the sales volume for May as opposed to last May showed a 38.6-percent increase, and a 30.3-percent increase for the year-to-date.
Lihu‘e had three fewer sales this May than last May, yet showed a 64.7-percent increase in median-sales prices. Koloa had 10 new home sales in May, up one from last May, but the median cost soared from $394,999 in May, 2004 to $605,000 this May, an increase of 53.1 percent.
Ono said there was no obvious explanation for the high numbers. As for Koloa, Ono said, “I don’t see any new construction, and there is not much inventory,” she said.
A report in Tuesday’s USA Today, under the headline “Unbuilt houses flooding market,” points to an interesting trend.
According to the report, “the number of houses for sale even before they’re built has jumped 47 percent over the past 12 months, adding worries that overbuilding and speculation could bring the housing boom to a bust.”
Ono said the significant increase in home prices in Lihu‘e and Koloa could be attributed to a high listing price for a particular property, or properties.
“It’s supply and demand. We haven’t had much of a construction boom on Kaua‘i,” she said.
According to an article in the June 20 edition of Barron’s, a weekly publication by the publishers of The Wall Street Journal, Yale economist Robert Shiller said, “the market is in the throes of a bubble of unprecedented proportions that probably will end ugly.”
He told Barron’s, “the home-price bubble feels like the stock-market mania in the fall of 1999, just before the stock bubble burst in early 2000, with all the hype, herd investing, and absolute confidence in the inevitability of continuing price appreciation.”
He said homeowners often live in denial of market realities by listing their properties at un-realistic prices, or simply taking their homes off the market to await better times.
Shiller told Barron’s that the market has become so over-heated in many areas of the United States that any decline could pick up momentum in two to three years, when the adjustable-rate mortgages that have accounted for nearly half of all home loans in the second half of 2004 will begin to “reprice” at higher interest rates, potentially burying overly optimistic buyers sporting scant equity but hefty debt.
Low-to-no-down-payment and interest-only mortgages would only add to the possible mayhem of involuntary sales if home prices were to sag, Shiller told Barron’s.
He is quoted in the Barron’s report, saying, “These days, the only thing that comes close to real estate as a national obsession is poker.”
- Andy Gross, business editor, 245-3681 (ext. 251) or email@example.com.