Median home price hits $750,000

What bubble?

After dipping a bit in August, the median price of a single-family home on Kaua’i leaped to an all-time high of $750,000.

This surpassed the record $700,000 in July, and was more than $100,000 more than August’s median price of $649,000, according to statistics provided by leaders with the Hawaii Information Service MLS (multiple listing service).

Some of the data may not be exact, said Toni Souza-Ishimoto, staff specialist for the Kauai Board of Realtors. She did not specify what data might be incorrect, or how it might impact final sales and volume reports.

For the first nine months this year, Kaua’i’s median single-family home price was $639,000, up 33.4 percent from the same time a year ago. Total sales are down 1.5 percent, but sales volume is up 34 percent for the year-to-date.

The reason? High demand and limited inventory.

Buyers today have to wait on projects that are already online, although new housing that isn’t restricted by affordable-pricing commitments still could see prices moving higher because costs are increasing, too, local real-estate professionals said.

“My feeling is that, when you go month-to-month, I’m not so sure that’s an indication of a trend,” said Richie Richardson, president of the Kauai Board of Realtors and owner and principal broker of RE3 LLC Real Estate Services.

“There’s a lot of things that affect the market,” he said, referring to rising interest rates.

“We don’t have a lot of supply. It’s a supply-constrained market,” he said.

Richardson said that, historically, Hawai’i and Kaua’i are influenced by California’s real-estate market, and still are, to an extent. But Richardson said there is no longer that six-to-eight-month lag time that used to typify the relationship.

“We have other influences on our economy. There’s more of an international influence.”

Both Richardson, and Louis Abrams, co-owner of Charlee & Associates Realtors, agreed that median prices could be skewed by a couple of very-high-end purchases.

Abrams pointed to a $1.5-million sale in Kekaha as an example.

“We’re bumping along, not nearly as fast, but the demand is there,” Abrams said, adding that, traditionally, September had been something of a slow month.

Dr. Leroy Laney, professor of economics and finance at Hawaii Pacific University and a consultant to officials at First Hawaiian Bank, said he felt a long-range correction was needed for Kaua’i’s overheated real-estate market, that it had to be consumer driven, such as buyers just saying “no” to over-valued properties.

“Economics 101 teaches us that the only way to effectively bring down the now-exorbitant home prices is to increase supply,” Laney said in a recent address to members of the Kaua’i business community.

Kaua’i’s housing market saw not only a rise in median prices for September, but significant increases in the number of sales, and an astronomical, 115.7 increase in sales volume for September compared to last year.

There were only two residential purchases in the Waimea district in September, yet the sales volume increased by more than 60 percent.

Single-family-home sales were up in every district except Lihu’e, which showed a 13.45 percent decrease.

Condominium sales volume was up 46 percent for first nine months of this year compared to the same period last year, while actual sales were up 20 percent, according to MLS statistics. The median cost of a condo is September was $405,000, while the average was $533,775.

Vacant-land sales in Lihu’e jumped from two in September 2004 to 48 last month, an increase of 2,300 percent.

This was attributed to multiple sales at the Grove Farm Pikake subdivision, phase one, and activity at Kukui Grove Village West.

For the first nine months this year, vacant-land sales in Lihu’e were up 239 percent compared with the same period last year, while vacant-land sales for the island as a whole are up 20.7 percent.

Commercial land sales are down across the board for each district.

According to MLS statistics from the Realtors Association of Maui, the median price of a single-family home rose $10,000 from July to September, to $680,000. The average price fell by $50,000 to $945,000.

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